REG - Premier Foods plc Premier Foods Fin - Acquisition of The Spice Tailor

Premier FoodsAnnouncement

25/07/2022 07:00

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RNS Number : 5262T  Premier Foods plc  25 July 2022

25 July 2022

Premier Foods plc (the "Company" or the "Group")

 

 Acquisition of The Spice Tailor, accelerating branded growth strategy

Premier Foods today announces it has agreed to acquire The Spice Tailor ("The
Spice Tailor"), a premium, authentic Indian and South East Asian meal kits and
accompaniments brand.

 Strategic highlights

 

·      A high growth premium brand with +20% compound annual growth
rate(1) over the last four years and forecast to deliver strong sales and
profit growth over the coming years

·      Closely aligned to current consumer trends including convenient
home cooking, premiumisation and authenticity

·      Highly complementary to the Group's Sharwood's and Loyd Grossman
brands

·     Strong geographical fit with Premier Foods' existing footprint,
with a presence in the UK, Australian, Canadian and Irish markets

·      Will significantly expand the Group's ethnic foods business in
Australia

·      Delivery of further growth through leveraging Premier Foods'
well established and proven branded growth model

·     The Group's strong retailer partnerships present a clear opportunity
to expand current retailer distribution across existing and new geographies

 

 Alex Whitehouse, Chief Executive Officer

"We have greatly admired The Spice Tailor business for some time and we're
very much looking forward to it joining our existing stable of strong brands.
The acquisition is well aligned to our growth strategy and we see a clear
opportunity to build on the excellent track record of The Spice Tailor, by
leveraging the elements of our proven branded growth model. This acquisition
represents a highly complementary geographical fit, and we see significant
potential to expand The Spice Tailor's distribution in all our target markets.
We see this as another important milestone for us following the Group's strong
performance over recent years and The Spice Tailor is an important addition to
accelerate our future growth plans."

 

 Adarsh and Anjum Sethia, Founders, The Spice Tailor

"We're very pleased that The Spice Tailor will become part of Premier Foods
and are looking forward to unlocking further growth for the brand which we
have nurtured since its inception. We see Premier with their track record of
brand investment and strong commercial relationships, as the perfect fit for
The Spice Tailor, driving it onto the next stage of its evolution."

 

 

 Transaction details

 

·     Premier Foods will acquire 100% of The Spice Tailor shares(2) for
initial consideration of £43.8m on a cash free and debt free basis

·     Additional consideration is dependent on future performance, earn
out structure over a three year period from FY23/24, subject to further growth
targets(3)

·      Earnings accretive(4) in year one and funded through a
combination of cash and available committed facilities

·      The Spice Tailor is expected to generate revenue of £17.3m in
FY22/23

·      Completion is subject to merger control clearance

·      On a pro forma basis, if this transaction completed during the
financial year ended 2 April 2022, Net debt/EBITDA would have been flat to the
prior year; the Group's net debt/EBITDA target of 1.5x is unchanged

 

 Further background

 

The Spice Tailor is particularly popular with consumers who enjoy scratch
cooking and appreciate the strong authentic taste profiles the products
deliver, typically attracting different consumers than users of Sharwood's and
Loyd Grossman. Once integrated into the Group's Cooking Sauces and
Accompaniments category team, The Spice Tailor will benefit from increased
levels of marketing investment to drive product awareness and household
penetration, additional new product development resources, and access to
Premier Foods' commercial capabilities and strong retailer relationships. The
Spice Tailor's largest markets are the UK and Australia which account for 58%
and 35% respectively of annual FY21 sales.

 

Operating an asset light business model, the authenticity of The Spice Tailor
range is reflected in the fact that the vast majority of its products are
manufactured in India, by way of outsourcing to BRC accredited suppliers.

 

Further information on the transaction can be found in an investor
presentation on our website at
https://www.premierfoods.co.uk/Investors/Results-Centre/2022-2023.aspx
(https://www.premierfoods.co.uk/Investors/Results-Centre/2022-2023.aspx)

 

~ Ends ~

 

About Premier Foods

As one of the UK's largest food businesses, we're passionate about food and
believe each and every day we have the opportunity to enrich life for
everyone. Premier Foods employs over 4,000 people operating from 15 sites
across the country, supplying a range of retail,
wholesale, foodservice and other customers with our iconic brands which
feature in millions of homes every day.

 

Through some of the nation's best-loved brands, including Ambrosia,
Batchelors, Bisto, Loyd Grossman, Mr. Kipling, Oxo and Sharwood's, we're
creating great tasting products that contribute to healthy and balanced diets,
while committing to nurturing our people and our local communities, and going
further in the pursuit of a healthier planet, in line with our Purpose of
'Enriching Life Through Food'.

 

Contacts:

 

Institutional investors and analysts:

Duncan Leggett, Chief Financial Officer

Richard Godden, Director of Investor Relations

Investor.relations@prem (mailto:Investor.relations@premier) ier
(mailto:Investor.relations@premier) foods.co.uk

 

Media enquiries:

Lisa Kavanagh, Director of
Communications

 

Headland

Ed
Young
+44 (0) 7884 666830

Jack
Gault
+44 (0) 7799 089357

 

- Ends -

 

This announcement may contain "forward-looking statements" that are based on
estimates and assumptions and are subject to risks and uncertainties.
Forward-looking statements are all statements other than statements of
historical fact or statements in the present tense, and can be identified by
words such as "targets", "aims", "aspires", "assumes", "believes",
"estimates", "anticipates", "expects", "intends", "hopes", "may", "would",
"should", "could", "will", "plans", "predicts" and "potential", as well as the
negatives of these terms and other words of similar meaning. Any
forward-looking statements in this announcement are made based upon Premier
Foods' estimates, expectations and beliefs concerning future events affecting
the Group and subject to a number of known and unknown risks and
uncertainties. Such forward-looking statements are based on numerous
assumptions regarding the Premier Foods Group's present and future business
strategies and the environment in which it will operate, which may prove not
to be accurate. Premier Foods cautions that these forward-looking statements
are not guarantees and that actual results could differ materially from those
expressed or implied in these forward-looking statements. Undue reliance
should, therefore, not be placed on such forward-looking statements. Any
forward-looking statements contained in this announcement apply only as at the
date of this announcement and are not intended to give any assurance as to
future results. Premier Foods will update this announcement as required by
applicable law, including the Prospectus Rules, the Listing Rules, the
Disclosure and Transparency Rules, London Stock Exchange and any other
applicable law or regulations, but otherwise expressly disclaims any
obligation or undertaking to update or revise any forward-looking statement,
whether as a result of new information, future developments or otherwise.

 

Notes to editors:

 

1.   Four-year average revenue growth rate, year ended 31 March 2018 to 31
March 2021.

2.   The Group will acquire 100% of the shares of The Spice Tailor Limited
and its subsidiaries, The Spice Tailor Direct Limited, The Spice Tailor
(Canada) Limited and The Spice Tailor (Australia) Pty Limited.

3.  Additional consideration above the Enterprise value of £43.8m is
structured over a three-year timeframe from year ending 30 March 2024,
dependent on future sales growth and subject to a maximum cap of total
consideration (comprising initial consideration and additional consideration)
of £72.5m.

4.   For year ended 31 March 2021, The Spice Tailor reported Profit before
tax of £0.7m; as at 31 March 2021, Gross Assets were £4.6m

5.   Expected to be Adjusted earnings per share ("eps") accretive in year
one. Adjusted eps is defined as Adjusted profit after tax divided by the
weighted average number of shares in the period. Adjusted profit after tax is
defined as Adjusted profit before tax less a notional charge of 19.0%.
Adjusted profit before tax is defined as Trading profit less net regular
interest. Trading profit is defined as profit/(loss) before tax, before net
finance costs, amortisation of acquired intangibles, fair value movements on
foreign exchange and other derivative contracts, net interest on pensions and
administration expenses. Net regular interest is defined as net finance cost
after excluding write-off of financing costs, early redemption fees, other
interest payable and other finance income.

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