A US company has demonstrated the American taste for peanut butter and jam sandwiches, buying up Hartley’s and Sun-Pat, as Premier Foods offloads another batch of British brands to a foreign owner.
Hain Celestial, better known for natural and organic products, will pay £170m in cash and £30m in shares for Premier’s sweet spreads and jellies business, which also includes Gale’s honey.
The deal will see another famous British brand fall into foreign hands, after US-based Kraft bought Cadbury, and China’s Bright Food gobbled up a controlling stake in Weetabix.
Dating back to 1871, Hartley’s was initially a grocer’s founded by William Pickles Hartley in Lancashire. Legend has it that Pickles Hartley was forced to make his own batch of jam when an order did not show up.
The deal will be a relief to Premier Foods, which has put around 50 brands up for sale in a bid to whittle down debts built up by a decade-long buying spree. Chief executive Michael Clarke, who joined Premier last year from Kraft, aims to focus the company on eight “power brands” including Hovis, Oxo and Mr Kipling.
After this deal, Clarke said Premier will have raised around £275m of the £330m it hopes to raise from brand sales by June 2014. That represents a 22% reduction in the company’s debt pile, which stood at £1.3bn at the end of June.
Clarke said: “This divestment is a major step forward in our strategy to simplify the business and focus on our power brands. Our sweet spreads and jellies business was not core to Premier Foods and our employees in this business will benefit from being part of an international company that is committed to investing in, and growing, these categories.”
The spreads and jellies business initially attracted private equity interest, including Morgan Stanley Private Equity, CapVest, TDR and HIG. It is reported that they withdrew after preliminary bids of between £160m and £180m were considered too low, leaving Hale Celestial to take the prize.
Analysts have been perplexed by Hain Celestial’s interest in the brands, which do not seem a natural fit for its health foods business.
Irwin Simon, president of Hain Celestial, said on Wednesday: “In order to become one of the largest healthy food companies in the UK, we needed to expand [our] base into ambient [non-refrigerated] grocery.”
One portion of Hartley’s that will stay in the UK is the village of Hartley in Aintree, built for the company’s factory workers in 1885, along roads named Sugar Street and Spice Street. The village has since been named a conservation area as an example of Victorian manufacturing philanthropy.