Premier Foods sells veggie favourite Quorn
Premier Foods has announced the sale of its vegetarian brand Quorn in a deal that will help reduce its £1.4bn debt pile.
Change of owner: The first Quorn product was launched in 1985
It is offloading both Quorn and meat-free sausage brand Cauldron for £205m to a private equity consortium made up of Exponent Private Equity and Intermediate Capital Group.
Premier's shares rose 0.51p to 22.86p on news of the sale, which will improve the firm's earnings to debt ratio.
It revealed last month it was in advanced talks with two potential buyers for Quorn – one of which was widely-speculated to be Swiss food giant Nestle.
Reports at the time suggested the sale could fetch between £200m and £230m.
The company has been trying to reduce a debt pile built up during an acquisition spree that included Hovis owner RHM and Campbell's Soup in UK and Ireland.
Premier received an approach for the Mr Kipling cake business last year and there has been speculation its Hovis bread brand could go up for sale.
Commenting on the Quorn deal, Premier chief executive Robert Schofield said: 'We are pleased to have concluded this sale agreement. It makes a significant contribution to reducing our debt.'
He said it was a 'step along the road to achieving a capital structure which we believe will be more attractive to investors'.
Premier purchased Quorn for £172m from Marlow Foods in 2005. It said today that in 2010 the meat-free arm made revenues of £128.8m and a trading profit of £16.2m. The division has three manufacturing sites in the UK and employs nearly 595 staff.
The first Quorn product was launched in 1985 using a specially developed protein-based ingredient called mycoprotein, and it has since become a popular meat substitute for vegetarians. Cauldron offers a range of tofu products and vegetarian sausages.
Chris Graham, founding partner of buyer Exponent, said the firm plans to grow the meat-free business further with additional investment.
Exponent, which has stakes in thetrainline.com and bed store Dreams, is a private equity firm which focuses on companies with an enterprise value of between £75m and £350m.
Its consortium partner ICG provides mezzanine finance, leveraged credit and minority equity to companies worldwide.
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