Premier Foods, the owner of Hovis, has agreed to sell a 51% controlling stake in its struggling bread division to US investment firm The Gores Group for £30 million. The deal will establish a joint venture named Hovis Limited, with both companies committed to jointly investing £45 million to revitalise the iconic brand.
The Gores Group managing director Fernando Goni expressed excitement about the transaction, stating: “We believe there is significant untapped potential in such a well-loved household name.” The deal remains subject to shareholder approval and clearance from the European Commission.
Premier Foods, which also produces Mr Kipling cakes and Bisto gravy, said the proceeds from the sale would be invested into its grocery business. The company spent £28 million last year restructuring its bread operations, including closing two mills and three bakeries and losing several contracts.
Looking ahead, Premier Foods plans to focus its 2014 expenditure on its cake business, with a £20 million investment in a new snack pack cake slice line at its Barnsley factory. Separately, the company reported that its trading profit for the year ending December was in line with expectations.
