Premier Foods has sold its Elephant Atta ethnic flour business to Westmill Foods, a subsidiary of Associated British Foods plc for £34 million.The sale includes the Elephant Atta, Elephant Chakki Gold and Fassal brands which are predominantly manufactured and packed at the group's mill in Southampton.
The proceeds of the sale will be used to pay down debt.
Michael Clarke, CEO, Premier Foods said: "We are continuing to deliver on our growth strategies, growing our Power Brands, divesting selected, non-core businesses and reducing costs on track with our plans. The Elephant Atta brands are great brands that I'm sure will benefit from being part of Westmill Foods."
Premier Foods and ABF have entered into a co-packing agreement pursuant to which Premier Foods will continue to manufacture the Elephant Atta brands at its Southampton mill. The two companies have also entered into transitional services arrangements to facilitate the smooth transfer of the business.
For the year ended 31 December 2011, the Elephant Atta business had reported revenues of £17.8m and an EBITDA (before selling, general and administrative costs) of £6.4m. The value of the transaction represents approximately 1.9x revenues. The gross assets of the Elephant Atta business as at 31 December 2011 were £3m.
• PHOTOGRAPH SHOWS: Michael Clarke