Premier Foods, Gores Group to jointly operate Hovis

LONDON Mon Jan 27, 2014 2:15am EST

LONDON Jan 27 (Reuters) - Britain's Premier Foods has signed an agreement with U.S. investment firm The Gores Group to jointly operate its struggling bread division, in a deal which values the unit at 87.5 million pounds ($144.40 million).

The Gores Group will pay 30 million pounds for a 51 percent stake in the bread business, which will operate under the Hovis name. The transaction will give Premier Foods a short-term cash inflow of 28 million pounds which it intends to invest in its grocery business, it said on Monday.

The two parties have also agreed to invest a combined 45 million pounds in Hovis which will enable a 200 million pound five-year investment programme for the bread business.

Premier Foods also said its trading profit for the year to the end of December was in line with expectations.