Premier Foods forms JV with Specialty Powders to strengthen grocery infrastructure

UK-based Premier Foods has entered into an agreement with Specialty Powders to establish a stand-alone joint venture to process and pack powdered beverages and desserts at its Knighton facility in Staffordshire.

This move is line with Premier Foods’ strategy to maximise value and efficiencies from its grocery infrastructure.

The new joint venture, known as Knighton Foods, will combine dry powders manufacturing capabilities and assets from both companies at the Knighton site.

Under the deal, Knighton will transfer two production lines to Premier Foods’ manufacturing plant in Ashford, Kent, resulting in significant further efficiencies in Premier Foods’ broader grocery manufacturing infrastructure.

Specialty Powders will contribute its wholly-owned businesses, Phoenix Foods and Agglomeration Technology, to the joint venture, in exchange for a 51% controlling stake and a loan from the joint venture to repay its £3m existing debt.

Premier Foods will contribute its Knighton site and assets, along with its private label and business-to-business sales of powdered beverages and desserts, in consideration for a 49% stake in the joint venture.

It will retain the substantial majority of its branded sales currently made at Knighton, including the Bird’s, Angel Delight and Marvel brands, which will be manufactured either at its Ashford site or at Knighton by the joint venture under a co-packing arrangement.

Premier Foods CEO Gavin Darby said that the agreement will help to improve the efficiency of Premier’s Grocery infrastructure and will allow the company to benefit from a dedicated team with expertise that can support its powdered beverages and desserts business.

Specialty Powders group managing director Mike Kirby said that Knighton Foods will have a strong focus on dry powder products, with the ability to invest in new processes, products and packaging formats.

"Our combined technical expertise and manufacturing capabilities will ensure that we continue to deliver high-quality products for our customers and consumers, and enable us to develop a successful, broad-based powder processing and packing business for the future," Kirby added.

The deal includes the transfer of approximately £16m of private label and business-to-business sales of powdered beverages and desserts from Premier Foods to the joint venture.

Additionally, the Brown & Polson brand of home-baking ingredients will be licensed to the joint venture for a period of five years, which also includes a call option for the joint venture to acquire Brown & Polson for £2.75m.

All 200 employees at the Knighton facility are expected to transfer to the joint venture following an appropriate consultation process.

The transaction is currently expected to complete by the end of June.

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Image: The new joint venture will combine dry powders manufacturing capabilities and assets from both companies at the Knighton site. Photo courtesy of Premier Foods.