Premier Foods has bounced back into the M&A arena with the purchase of Merchant Gourmet, the UK-based manufacturer of ready-to-eat products.
The owner of the Batchelors noodles and soups brand is paying £48m ($64.6m) to acquire Merchant Gourmet in a deal that is expected to close on 1 September, Premier Foods said in a statement today (21 August).
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Merchant Gourmet produces branded ready-to-eat pulses and grains, microwaveable rice packs, and ready-meals. The business is projected to generate £28m in revenue in the year to 28 March, continuing its double-digit growth.
After a hiatus, Premier Foods returned to the M&A market in 2022 with the acquisition of The Spice Tailor, which supplies ingredients packs to produce Asian-based meals at home and has recently expanded with a Mexican offering.
Fuel10K, a manufacturer of snack bars, cereals and milk drinks, was then added to the portfolio in 2023.
Premier Foods’ CEO Alex Whitehouse said: “We’re very pleased to have agreed the acquisition of Merchant Gourmet, which meets the growing demand for
premium, healthy and convenient meal options.
“Replicating the success of our previous two acquisitions…we will be deploying our proven branded growth model; expanding retailer distribution, accelerating new
product development, and increasing marketing investment to unlock further profitable growth for the brand.”
Premier Foods, which also owns the Ambrosia and Sharwood’s brands, among others, added that Merchant Gourmet is “highly complementary” to its existing portfolio and is line with its “growth strategy of acquiring brands where it can add value and deliver further growth”.
Richard Peake, the managing director of Merchant Gourmet, said: “Over the last few years, our team have worked incredibly hard, delivering double-digit revenue growth and demonstrating huge success in entering new categories and new markets.
“Finding the best home for both Merchant Gourmet and our valued team is something we have thought carefully about, and we believe Premier Foods is the right partner to match our ambition.”
Merchant Gourmet’s 25 employees are all expected to transfer to Premier Foods.
The business currently uses third-party manufacturers. It supplies the major food chains Sainsbury’s, Tesco and Asda.
Premier Foods reported its first-quarter results in July. Group sales to the end of June rose 0.2% to £239.7m.
The business breaks down its results into grocery and sweet treats. Sales revenue for the former fell 2.8% in the quarter to £174.4m. The branded segment within grocery fell 2.2% to £158.4m.
Sweet treats reported 9.1% overall sales growth to £65.3m.
For the full 2024 financial year, Premier Foods posted a relatively flat sales result of £1.15bn. Operating profit climbed 1.9% to £181.1m.
Both net profit and diluted EPS rose 11% to £124.9m and 14.1 pence, respectively.
