David Prosser: Why Premier won't be breaking with bread
Wednesday 09 February 2011
Outlook Slowly but surely, Premier Foods is paying down the debt mountain it amassed during an acquisitions spree in the years before the credit crunch. Yesterday's sale of its canned foods business follows its disposal last month of Quorn.
Is the next stage in the process going to be a sell-off of Hovis, the bread brand it acquired as part of one of the biggest of those acquisitions, RHM? There has been some gossip in recent days to that effect, but Premier's protestations that there is no truth in the rumours make sense. It has spent heavily on a rebrand of Hovis, which has been successful, and the business is one of the jewels in its crown.
Still, the market seems to have barely noticed Premier's debt reduction efforts – the share price has barely moved on these disposals. Maybe that's because trading hasn't been impressive. Solving that problem will be tougher than lining up buyers for various parts of the business.
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