Premier Foods plc has agreed to sell its East Anglian canned grocery operations to Princes Limited for £182 million.

The sale will help reduce Premier Foods’ average debt/EBITDA ratios by around 0.2x, making a further contribution toward reaching the target leverage ratio of below 3.25x.

The sale is conditional on receiving consent from Premier Foods’ lending banks, its shareholders and European Commission merger control clearance.  The disposal is expected to complete in late March.

Premier Foods’ key priorities are to grow its branded business and to reduce its level of debt and leverage ratio. This sale contributes to both: it materially increases the group’s proportion of branded sales and materially reduces the group’s debt as well as contributing to reducing the leverage ratio.

CEO Robert Schofield, said: “As a predominantly non-branded business, it has not been an area of focus for us. Selling the business simplifies our operations and allows us to concentrate our efforts on our current portfolio of great British brands. 

“Combined with the proposed disposal of our meat-free business, we will have delivered total gross proceeds of £387m, significantly accelerating the delivery of our financial strategy.”

Princes MD Ken Critchley said the proposed deal was an “excellent strategic fit” for the group. “It will enable us to further grow our business in the UK and continental Europe by offering our customers a broader range of ambient food products and brands.”

The business being sold is part of Premier Food’s grocery division and has two manufacturing sites in the UK – one in Wisbech; two of the group’s warehouse operations in Wisbech will transfer after a transitional period.

• PHOTOGRAPH SHOWS: Premier Foods CEO Robert Schofield