Premier splashes out £70m on custard bid

Bird's Custard and Angel Delight have been sold for £70m to Premier Foods, the group which owns Ambrosia rice pudding and Rowntree's jelly.

The desserts date back to 1837 when Alfred Bird invented powdered custard. Since 1989 the puddings have been owned by Kraft, the US food group, which will transfer production of its powdered desserts to Premier's Knighton factory in Staffordshire, which makes Cadbury's drinking chocolate.

Paul Thomas, Premier's finance director, refused to comment on whether the move would herald a line of Angel Delight drinks being developed. He said: "We're going to have a good look at the brands and understand how we make them relevant to the consumer."

The desserts category has been in slow decline, shrinking by about 3 per cent in the last three years. However, Premier was floated in July as a specialist owner of household grocery brands, some of which had been neglected by former owners.

Mr Thomas said: "Ambrosia had seen 3 per cent decline in line with the category when we bought it in December 2003. Since then we've turned it into growth. In the first half of the year it grew by 6 per cent.

"What we've got here are brands that sit in big multinationals and because of investment and marketing priorities they are a bit neglected. We effectively bring consumer awareness, marketing focus, advertising and innovation."

The Bird's and Angel Delight deal is the first acquisition since Premier floated at 215p when the US private equity group Hicks, Muse, Tate & Furst, sold out of the business. Its shares closed at 258p yesterday.

The brands being bought had sales of £37m with profit before administrative costs of £9.9m in the 12 months to 14 December 2003. Premier said that it planned to spend £5m on upgrading the Knighton factory, creating 60 jobs and producing cost savings of £1m once the deal is completed next February.

Bird's and Angel Delight will join Premier's larder standards such as Typhoo tea, Branston pickle and Hartley's jam. It also owns Smash mashed potato and Loyd Grossman cooking sauces under licence.