12th Jul 2006 07:01
Premier Foods plc12 July 2006 NOT FOR DISTRIBUTION OR TRANSMISSION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA, JAPAN, AUSTRALIA OR THE REPUBLIC OF SOUTH AFRICA PREMIER FOODS PLC PROPOSED ACQUISITION OF CAMPBELL'S UK & IRELAND FULLY UNDERWRITTEN RIGHTS ISSUE TO RAISE APPROXIMATELY £450 MILLION Premier Foods plc today announces the proposed acquisition of the UK and Irishbusinesses of the Campbell Soup Company ("Campbell's UK") for £460 million on adebt-free, cash-free basis. The Acquisition is intended to be funded primarily by a fully underwrittenRights Issue raising gross proceeds of approximately £450 million. Highlights of the transaction • Acquisition of iconic category-leading brands in the UK and Ireland,including Oxo, Batchelors, Homepride and Fray Bentos; • In the financial year ended 31 July 2005, Campbell's UK had sales of£263 million, operating profit before management charge and financing costs of£26 million and Acquired EBITDA of £54 million; • 98 per cent. of sales are in the UK and Ireland and 94 per cent. ofsales are branded, taking Premier's branded sales mix to 69 per cent.; • Projected cost synergies from the combination of Premier's businesswith Campbell's UK of £28 million within 3 years; • Expected to be margin enhancing and earnings accretive in the firstfull year; • Expected to generate a return on invested capital in excess ofPremier's weighted average cost of capital by the end of the first full year;and • Balance sheet flexibility to pursue acquisitions without furtherrecourse to shareholders. The Directors believe that the Acquisition will meet each of Premier's clearlydefined strategic and financial acquisition criteria and that Campbell's UK isan excellent strategic fit for its business. Premier intends to integrate Campbell's UK fully into its core Grocery business.Management has a strong track record of integration, with five acquisitionssuccessfully integrated since 2002. Financing arrangements for the Acquisition The Company intends to fund the transaction primarily through a Rights Issue ata minimum subscription price of 160 pence per New Ordinary Share to raise grossproceeds of approximately £450 million. The Rights Issue has been fullyunderwritten by Merrill Lynch International and Hoare Govett. The Issue Priceand the number of New Ordinary Shares will be determined at the time theProspectus is issued, which is expected to be in late July. Chief Executive's comments Commenting on the Acquisition, Robert Schofield, Chief Executive of Premier,said: "The Campbell's UK business fits Premier like a glove. This acquisition willbring an excellent portfolio of powerful and iconic brands which we intend todrive forward with increased resource and innovation. In addition, the verysubstantial synergies which Premier can deliver make this transaction highlycompelling from a financial perspective. Moreover, we are putting in place afinancing structure which will give us the flexibility to continue to pursue ouracquisition strategy." The interim results for the six months ended 1 July 2006 are now expected to beissued on 7 August 2006. An analyst and investor meeting will be held at 9.30am at ABN AMRO, 250Bishopsgate, London, EC2M 4AA (London time) today. Dial-in details (listenonly) are as follows: 020 7138 0817. In addition, the presentation will beavailable via audio cast at www.premierfoods.co.uk For further information, please contact: Premier: on the day of announcement 020 7638 9571; thereafter, 01727 815 850Robert Schofield, Chief ExecutivePaul Thomas, Finance DirectorRobert Lawson, M&A and Investor Relations DirectorGwyn Tyley, Investor Relations Manager Rothschild: 020 7280 5000Akeel SachakAlexis MastersRobert Plowman Spayne Lindsay: 020 7808 3240Tom LindsayChris Packe Merrill Lynch International: 020 7996 1000Peter TraceyChris SnoxallPeter Brown Hoare Govett Limited: 020 7678 8000Ranald McGregor-SmithJeremy Thompson Citigate Dewe Rogerson: 020 7638 9571Michael BerkeleySara BatchelorJustin Griffiths This announcement has been issued by, and is the sole responsibility of,Premier. N M Rothschild & Sons Limited, which is authorised and regulated in the UnitedKingdom by the Financial Services Authority, is acting as sponsor and leadfinancial adviser to the Company in connection with the Rights Issue and theAcquisition and will not be responsible to any person other than the Company forproviding the protections afforded to customers of N M Rothschild & SonsLimited, or for advising any such person on the contents of this announcement orany other transaction, arrangement or matter referred to herein. Spayne Lindsay & Co. LLP, which is authorised and regulated in the UnitedKingdom by the Financial Services Authority, is acting as financial adviser tothe Company in connection with the Rights Issue and the Acquisition and will notbe responsible to any person other than the Company for providing theprotections afforded to customers of Spayne Lindsay & Co. LLP, or for advisingany such person on the contents of this announcement or any other transaction,arrangement or matter referred to herein. Merrill Lynch International, which is authorised and regulated in the UnitedKingdom by the Financial Services Authority, is acting as joint broker and jointunderwriter to the Company in connection with the Rights Issue and will not beresponsible to any person other than the Company for providing the protectionsafforded to customers of Merrill Lynch International, or for advising any suchperson on the contents of this announcement or any other transaction,arrangement or matter referred to herein. Hoare Govett Limited, which is authorised and regulated in the United Kingdom bythe Financial Services Authority, is acting as joint broker and jointunderwriter to the Company in connection with the Rights Issue and will not beresponsible to any person other than the Company for providing the protectionsafforded to customers of Hoare Govett Limited, or for advising any such personon the contents of this announcement or any other transaction, arrangement ormatter referred to herein. This press announcement does not constitute an offer to sell or the solicitationof an offer to acquire New Ordinary Shares and/or provisional allotment lettersand/or nil-paid rights and/or fully-paid rights and/or to take up anyentitlements. The offer to acquire New Ordinary Shares pursuant to the proposedRights Issue will be made solely on the basis of information that will becontained in the Prospectus to be published in connection with such issue. The information contained in this announcement is not for release, publicationor distribution to persons in the United States, Canada, Japan, Australia or theRepublic of South Africa or any other jurisdiction where doing so may constitutea violation of local securities laws. This announcement is not an offer ofsecurities for sale into the United States. The New Ordinary Shares have notbeen and will not be registered under the US Securities Act of 1933, as amended,and may not be offered or sold, directly or indirectly, in the United Statesabsent registration or an exemption from registration. The New Ordinary Shareshave not been and will not be registered with any regulatory authority of anystate within the United States. There will be no public offer of securities inthe United States. This announcement includes statements that are, or may be deemed to be, "forwardlooking statements". These forward looking statements can be identified by theuse of forward looking terminology, including the terms "believes", "estimates","plans", "anticipates", "targets", "aims", "continues", "expects", "intends", "hopes", "may", "will", "would", "could", or "should" or, in each case, theirnegative or other variations or comparable terminology. These forward lookingstatements include matters that are not facts. They include statementsregarding the Group's intentions, beliefs, or current expectations concerning,among other things, the Group's and/or the Enlarged Group's results ofoperations, financial condition, liquidity, prospects, growth, strategies andthe industries in which the Group and/or the Enlarged Group operates. By theirnature, forward looking statements involve risk and uncertainty because theyrelate to future events and circumstances. A number of factors could causeactual results and developments to differ materially from those expressed orimplied by the forward looking statements including, without limitation: theCompany's ability successfully to combine the business of the Group and thebusiness of Campbell's UK and to realise expected synergies from thatcombination, conditions in the markets, market position of the Company or itssubsidiaries, earnings, financial position, cash flows, return on capital andoperating margins, anticipated investments and capital expenditures, changingbusiness or other market conditions and general economic conditions. These andother factors could adversely affect the outcome and financial effects of theplans and events described in this announcement. Forward looking statementscontained in this announcement based on past trends or activities should not betaken as a representation that such trends or activities will continue in thefuture. Save as required by law or by the Listing Rules, the Prospectus Rulesor the Disclosure Rules, Premier does not undertake any obligation to update orrevise any forward looking statements, whether as a result of new information,future events or otherwise. Undue reliance should not be placed on forwardlooking statements, which are applicable only as at the date of thisannouncement. No statement in this announcement is intended to constitute a profit forecastfor the financial years ending 31 December 2006, 31 December 2007, 31 December2008 or 31 December 2009 or any other period, nor should any statements beinterpreted to mean that earnings or earnings per Ordinary Share willnecessarily be greater or lesser than those for the relevant preceding financialperiods for either Premier or Campbell's UK. Rather, these statements should beconstrued as references to potential enhancements to the earnings that mightotherwise have been earned during the relevant financial period. Appendix I contains further financial information on Campbell's UK. Appendix II contains the definitions of certain terms used in this announcement. This summary should be read in conjunction with the full text of the followingannouncement. NOT FOR DISTRIBUTION OR TRANSMISSION, DIRECTLY OR INDIRECTLY, IN OR INTO THEUNITED STATES, CANADA, JAPAN, AUSTRALIA OR THE REPUBLIC OF SOUTH AFRICA PREMIER FOODS PLC PROPOSED ACQUISITION OF CAMPBELL'S UK & IRELAND FULLY UNDERWRITTEN RIGHTS ISSUE TO RAISE APPROXIMATELY £450 MILLION 1. Introduction Premier announces that it has reached conditional agreement with Campbell SoupCompany to acquire Campbell's UK for a debt-free, cash-free cash considerationof £460 million. Campbell's UK is a manufacturer of ambient foods in the UnitedKingdom under brands including Oxo, Batchelors, Homepride and Fray Bentos. Premier proposes to fund the Acquisition primarily through a Rights Issue of NewOrdinary Shares to raise gross proceeds of approximately £450 million. TheRights Issue has been fully underwritten by Merrill Lynch International andHoare Govett. The Issue Price, and the number of New Ordinary Shares, will bedetermined upon publication of the Prospectus, which is expected to be in lateJuly 2006. The Acquisition is conditional upon the approval of Shareholders. The RightsIssue is conditional, amongst other things, on the passing of the Resolutions. Completion of the Acquisition is expected to occur following shareholderapproval and before the Rights Issue closes. Merrill Lynch International andABN AMRO Bank N.V. have agreed to provide the Company with a bridge facility of£450 million for this purpose. 2. Background to and reasons for the Acquisition and the Rights Issue 2.1 Background to Premier Foods and its strategy Premier is a leading UK manufacturer of grocery products and operates itsbusiness in two primary segments - Grocery and Fresh Produce. Premiermanufactures and supplies a range of category-leading branded and retailer labelproducts predominantly to the UK food retail industry. Within Grocery, the Group is organised into its Convenience Foods, Pickles,Sauces & Meat Free and Spreads, Desserts & Beverages product groupings. TheFresh Produce business comprises potato and fresh produce packing and marketingoperations supplying the retail, foodservice, food manufacturing and potatogrowing markets. Premier's branded products include, among others, Quorn and Cauldron meat-freeproducts, Ambrosia custard and milk puddings, Branston pickles, baked beans andcanned pasta, Hartley's preserves and jelly, Gale's honey and lemon curd, Crosse& Blackwell convenience foods, Sun-Pat peanut butter, Sarsons vinegar, Haywardspickles, Smash instant mashed potato, Marvel powdered milk creamer and Waistlinesalad dressings, soups and baked beans. In addition, Premier produces LoydGrossman cooking sauces and soups under licence. Premier also produces a rangeof retailer brand products, principally for the major multiple retailers. Premier's broad portfolio of market-leading branded products, and its retailerbrand products, together provide it with stable sales and cash flow and offer ita platform for organic growth in its branded products by means of productinnovation and product line extension. As one of the largest suppliers ofgrocery products in the United Kingdom, Premier has long-standing relationshipswith its principal customers, the major multiple retailers, and it is able torealise economies of scale in sourcing of raw materials, manufacturing,distribution and marketing. In addition, Premier also supplies foodservice,convenience store, out-of-home and food manufacturing customers. The current management team has been implementing a strategy to developPremier's business. Premier's strategy is: • To use its scale to drive its business in three key areas: organicbranded growth; growth through its customer relationships; and cost savings andbusiness simplification; • To manage its retailer brand products pro-actively and to view itsretailer brand business as an important complement to its branded offering; and • To continually evaluate opportunities to make further acquisitions ofgrocery product brands, and in particular, of "great British brands". Premier has clearly defined strategic and financial acquisition criteria inplace against which it measures all the acquisition opportunities that itidentifies. The financial criteria are set out in paragraph 5. The strategiccriteria are that the acquisition should: • Reinforce the branded sales mix of the Group; • Maintain a focus on the United Kingdom grocery market; • Bring brands with category-leading positions; • Provide attractive levels of commercial and cost synergies; • Be able to be integrated with minimal risk; and • Provide the platforms which will support Premier's future salesgrowth. Under its acquisition strategy, Premier has acquired the following businessessince 2002: • In May 2002, Premier acquired the ambient foods business in the UnitedKingdom of Nestle SA which added five category-leading brands to its existingbrand portfolio, including Branston pickles, Sarsons vinegar, Gales honey andlemon curd, Sun-Pat peanut butter and Rowntree's jelly; • In December 2003, Premier acquired the ambient desserts business inthe United Kingdom and the Republic of Ireland of Unilever Bestfoods UK Limitedwhich added the category-leading Ambrosia custard and milk puddings brand to itsportfolio; • In February 2005, Premier acquired the ambient desserts business inthe United Kingdom and the Republic of Ireland of Kraft Foods (UK) Limited whichadded the category-leading Bird's custard and Angel Delight instant colddesserts brands to its portfolio; • In June 2005, Premier acquired the Quorn brand, the leading brand inthe United Kingdom in the growing meat-free category; and • In October 2005, Premier acquired the Cauldron brand, the secondlargest brand in the United Kingdom in the meat-free category. Premier has successfully completed the planned integration of all itsacquisitions. 2.2 Information on Campbell's UK Campbell's UK is also a supplier of foods to the UK retail grocery andfoodservice markets, manufacturing a range of market-leading branded andown-label products. 98 per cent. of Campbell's UK's sales are in the UK andRepublic of Ireland. 94 per cent. of Campbell's UK's sales are branded and include the leading brandin 7 categories in the United Kingdom. These are Oxo stocks, BatchelorsCup-A-Soup instant dry soup, Batchelors SuperNoodles block noodles, BatchelorsSavoury Rice dry flavoured rice, Batchelors Pasta'n'Sauce dry pasta with sauce,Batchelors canned peas and Fray Bentos canned meat pies. These brands havestrong category positions and high levels of distribution through the UnitedKingdom major multiple food retailers. Brand Category Branded Category PositionOxo Stock No 1Batchelors Cup-A-Soup Instant Dry Soup No 1Batchelors SuperNoodles Block Noodles No 1Batchelors Pasta'n'Sauce Savoury Pasta No 1Batchelors Canned Peas No 1Batchelors Savoury Rice Savoury Rice No 1Fray Bentos Canned Meat Pies No 1Batchelors SuperNoodles Pot Noodles No 2Oxo Gravy No 2Campbell's Wet Soup No 3Homepride Cooking Sauces No 4 Source: IRI 52 w/e 25 March 2006 The Campbell's UK business has three manufacturing sites in the United Kingdomand one in the Republic of Ireland and two administrative offices, one in eachof the United Kingdom and Republic of Ireland. Campbell's UK Selected Financial Information£ million 12 months ended 9 months ended 31 July 2003 31 July 2004 31 July 2005 30 April 2006 Sales 280.4 274.5 262.7 199.3 Acquired EBITDA 63.9 58.0 54.1 46.5 Profit before tax on 29.1 22.6 20.5 24.5ordinary activities Capital expenditure 6.2 6.6 6.2 1.9 Gross assets 505.2 461.7 446.9 438.8 Further financial information on Campbell's UK is set out in Appendix I. 2.3 Benefits of the Acquisition Premier believes that Campbell's UK is an excellent strategic fit for itsbusiness and that the Acquisition meets all of its strategic criteria. Thebenefits of the Acquisition include: Strong brands The size and strength of Campbell's UK's brands, particularly Oxo andBatchelors, provide Premier with brands which the Company believes it can use asplatforms for category extension and new product launches, with the scale of thebrands enabling more efficient marketing. Premier considers that Oxo is a "great British brand", with high levels of brand recognition and householdpenetration. Premier believes that it can extend Oxo into adjacent categoriesleveraging the brand's association with "wholesome home-cooked food".Batchelors, with retail sales in 2005 of £114 million, has a leading position inthe "hot savoury snacks" category through its predominantly dehydrated productportfolio. Premier intends to leverage its existing strong category positionsto develop more contemporary snacking formats. Complementary operations The acquired business fits into Premier's Convenience Foods and Saucescategories. Premier believes its knowledge of these categories and itsexperience of acquisition integration should enable it to integrate the businessquickly and smoothly whilst maximising potential synergies. Scale The increased scale of the combined business provides Premier with a number ofbenefits: • The branded mix of Premier's grocery sales will increasesignificantly, which Premier believes will provide its business with greaterresilience in the competitive market place; • Premier believes its customer relationships will benefit from theadditional volume of sales and categories that it will cover following theAcquisition; and • Premier believes the greater scale of the combined business willimprove its operational efficiency. Synergies Premier has estimated the pre-tax cost savings from removing duplication inadministrative functions, improved procurement and logistics efficiency and areduction in excess manufacturing capacity at £28 million. Premier expects torealise these synergies over a period of three years following the acquisitionwith £7 million, £21 million and £28 million being realised cumulatively in thefinancial years 2007, 2008 and 2009 respectively. Premier expects to incurone-off charges of £3 million, £28 million and £10 million in the financialyears 2006, 2007 and 2008 in achieving these synergies. In addition, Premierexpects to incur £6 million and £3 million of integration-related capitalexpenditure in 2007 and 2008 respectively. Premier considers that thecomplementary nature of Premier's and Campbell's UK's businesses, and Premier'ssignificant experience of integrating acquisitions, will enable the integrationof Campbell's UK's operations into Premier to proceed smoothly. 3. Employees Premier intends to integrate Campbell's UK fully into its core grocery business. Management has a strong track record of integration, with the plannedintegration of five acquisitions successfully completed since 2002. When makingan acquisition, Premier's policy is to seek out the strongest management forboth businesses to manage the combined business. Accordingly, Premier expectsthat a number of existing Campbell's UK management will become managers of theEnlarged Group and participate in the management of Premier more widely. Inaddition, Premier has identified additional resource to support the integration. 4. Funding The Acquisition and associated expenses will be funded from the gross proceedsof the Rights Issue with the remainder financed with debt. Premier has agreedcommitted financing which will increase its total debt facility to £1,085million. The facility was arranged by BNP Paribas, JPMorgan Chase Bank N.A.,Lloyds TSB Bank plc and The Royal Bank of Scotland plc. Premier's net debt at31 December 2005, pro forma for the acquisition of Campbell's UK and the RightsIssue, would have been £613 million. Merrill Lynch International and ABN AMRO Bank N.V. have agreed to providePremier with a bridge facility of £450 million to enable the Company to completethe Acquisition following Shareholder approval at the EGM and before the RightsIssue closes. The Rights Issue will provide the Group with the financial flexibility to pursuefuture acquisition opportunities without recourse to shareholders. 5. Financial effects of the Acquisition As part of its acquisition criteria, Premier has set the following financialcriteria: (i) Acquisitions should be accretive to earnings per ordinaryshare in the first full year following the acquisition; (ii) Acquisitions should generate a return on invested capital inexcess of Premier's weighted average cost of capital by the end of the secondfull year following the acquisition; and (iii) Premier will maintain leverage levels as measured by theratio between net debt to earnings before interest, tax, depreciation andamortisation which the Directors believe to be appropriate given the EnlargedGroup's rate of cash generation whilst maintaining flexibility to enable it topursue its acquisition strategy. Premier believes that the acquisition of Campbell's UK, funded as set out above,will achieve or exceed all of these criteria. 6. Current trading for Premier and Campbell's UK Premier Premier released its trading update for the six months to 1 July 2006 on 6 July2006 which contained the following statement: "Trading update for the six months to 1 July 2006: Premier continues to deliver strong branded sales growth and trading remains inline with its expectations. Premier, one of the leading suppliers of grocery products in the UK, isproviding the following update for the six months ended 1 July 2006. We expect like-for-like sales growth for the Group to be in line with ourtargets, underpinned by the performance of our brands. The overall rate ofgrowth, including acquisitions, is further enhanced by the performance of Quorn,which has seen sales growth accelerate. Robert Schofield, Premier Foods plc Chief Executive, said: "The first half of 2006 has reflected the continued success of our strategy ofgrowing our branded sales with Quorn, Branston, Loyd Grossman and Ambrosia allcontinuing to grow strongly. Cost pressures remain an issue but we areconfident the resilience of our business will continue to enable us to offsetthese pressures. Our expectations for the rest of the year remain unchanged." Convenience Foods, Pickles, Sauces and Meat Free Sales for this product group are anticipated to be significantly ahead of thesame period in 2005 due to the acquisitions of Quorn and Cauldron. We aredelighted at the progress of Quorn which has seen double digit sales growth inthe first half, driven by increased advertising and the launch of new products. After adjusting for the disposal of the Jonker Fris business, like-for-likesales are anticipated to be broadly in line with sales in the first half of 2005of £168 million. The sales pattern remains as in 2005 with the growth ofBranston and Loyd Grossman offset by lower sales of our smaller brands and ownlabel convenience foods. Branston Baked Beans have consolidated their market share and we are encouragedby continuing increases in household penetration and distribution ahead offurther TV advertising. Spreads, Desserts & Beverages Sales for this product group are anticipated to be strongly ahead of the salesof £132 million for the first half of 2005. We are pleased by the strong growthof Ambrosia, which has been driven by the launch of new products and growth ofsnacking formats, and new own label contracts. Fresh Produce As we indicated at the time of our AGM announcement, sales at our Fresh Producedivision have stabilised and profitability has improved versus the second halfof last year. In addition, we are pleased to be able to report that our insurance claim inrespect of the fire at our Bury St Edmunds factory has now been fully settled." Premier expects to announce its interim results for the six months ended 1 July2006 on 7 August 2006, which will then be published in a supplementaryprospectus. Campbell's UK For the 9 months ended 30 April 2006 both sales and EBITDA have been affected bya significant reduction in marketing spend over the period. This has resultedin higher business profits but at the expense of lower sales. 7. Principal terms of the Rights Issue The Company is proposing to raise gross proceeds of approximately £450 millionby way of a Rights Issue of New Ordinary Shares. The proceeds of the RightsIssue will be used to finance the Acquisition. The Rights Issue has been fullyunderwritten by Merrill Lynch International and Hoare Govett. The Issue Price,and the number of New Ordinary Shares, will be determined upon publication ofthe Prospectus, which is expected to be in late July 2006. The minimum price ofthe Rights Issue has been set at 160 pence per New Ordinary Share, which wouldrepresent an indicative discount of approximately 48.3 per cent. (not adjustedfor any interim dividend to be paid for the six months ended 1 July 2006) to themiddle market closing price of 309.5 pence per Ordinary Share on 11 July 2006,being the last Business Day prior to this announcement. The EGM to approve the Acquisition and the Rights Issue is expected to takeplace in mid-August, with nil paid dealings in the rights expected to commencethereafter. The Rights Issue is expected to close in early September. Adetailed timetable for the Rights Issue will be announced upon publication ofthe Prospectus. The New Ordinary Shares will, when issued, rank pari passu in all respects withthe existing Ordinary Shares, including the right to receive all dividends andother distributions hereafter declared, made or paid (save they will not rankfor any interim dividend which may be paid in respect of the six months ended 1July 2006). The Rights Issue is conditional, inter alia, on the passing of the Resolutions. 8. Prospectus and Extraordinary General Meeting A document comprising a combined prospectus and circular is expected to beposted to Shareholders in late July. A notice convening an ExtraordinaryGeneral Meeting to approve the Acquisition and the Rights Issue, expected to beheld in mid-August, will be set out in the Prospectus. An analyst and investor meeting will be held at 9.30am at ABN AMRO, 250Bishopsgate, London, EC2M 4AA (London time) today. Dial-in details (listenonly) are as follows: 020 7138 0817. In addition, the presentation will beavailable via audio cast at www.premierfoods.co.uk For further information, please contact: Premier: on the day of announcement 020 7638 9571; thereafter, 01727 815 850Robert Schofield, Chief ExecutivePaul Thomas, Financial DirectorRobert Lawson, M&A and Investor Relations DirectorGwyn Tyley, Investor Relations Manager Rothschild: 020 7280 5000Akeel SachakAlexis MastersRobert Plowman Spayne Lindsay: 020 7808 3240Tom LindsayChris Packe Merrill Lynch International: 020 7996 1000Peter TraceyChris Snoxall Peter Brown Hoare Govett Limited: 020 7678 8000Ranald McGregor-SmithJeremy Thompson Citigate Dewe Rogerson: 020 7638 9571Michael BerkeleySara BatchelorJustin Griffiths This announcement has been issued by, and is the sole responsibility of,Premier. N M Rothschild & Sons Limited, which is authorised and regulated in the UnitedKingdom by the Financial Services Authority, is acting as sponsor and leadfinancial adviser to the Company in connection with the Rights Issue and theAcquisition and will not be responsible to any person other than the Company forproviding the protections afforded to customers of N M Rothschild & SonsLimited, or for advising any such person on the contents of this announcement orany other transaction, arrangement or matter referred to herein. Spayne Lindsay & Co. LLP, which is authorised and regulated in the UnitedKingdom by the Financial Services Authority, is acting as financial adviser tothe Company in connection with the Rights Issue and the Acquisition and will notbe responsible to any person other than the Company for providing theprotections afforded to customers of Spayne Lindsay & Co. LLP, or for advisingany such person on the contents of this announcement or any other transaction,arrangement or matter referred to herein. Merrill Lynch International, which is authorised and regulated in the UnitedKingdom by the Financial Services Authority, is acting as joint broker and jointunderwriter to the Company in connection with the Rights Issue and will not beresponsible to any person other than the Company for providing the protectionsafforded to customers of Merrill Lynch International, or for advising any suchperson on the contents of this announcement or any other transaction,arrangement or matter referred to herein. Hoare Govett Limited, which is authorised and regulated in the United Kingdom bythe Financial Services Authority, is acting as joint broker and jointunderwriter to the Company in connection with the Rights Issue and will not beresponsible to any person other than the Company for providing the protectionsafforded to customers of Hoare Govett Limited, or for advising any such personon the contents of this announcement or any other transaction, arrangement ormatter referred to herein. This press announcement does not constitute an offer to sell or the solicitationof an offer to acquire New Ordinary Shares and/or provisional allotment lettersand/or nil-paid rights and/or fully-paid rights and/or to take up anyentitlements. The offer to acquire New Ordinary Shares pursuant to the proposedRights Issue will be made solely on the basis of information that will becontained in the Prospectus to be published in connection with such issue. The information contained in this announcement is not for release, publicationor distribution to persons in the United States, Canada, Japan, Australia or theRepublic of South Africa or any other jurisdiction where doing so may constitutea violation of local securities laws. This announcement is not an offer ofsecurities for sale into the United States. The New Ordinary Shares have notbeen and will not be registered under the US Securities Act of 1933, as amended,and may not be offered or sold, directly or indirectly, in the United Statesabsent registration or an exemption from registration. The New Ordinary Shareshave not been and will not be registered with any regulatory authority of anystate within the United States. There will be no public offer of securities inthe United States. This announcement includes statements that are, or may be deemed to be, "forwardlooking statements". These forward looking statements can be identified by theuse of forward looking terminology, including the terms "believes", "estimates","plans", "anticipates", "targets", "aims", "continues", "expects", "intends", "hopes", "may", "will", "would", "could", or "should" or, in each case, theirnegative or other variations or comparable terminology. These forward lookingstatements include matters that are not facts. They include statementsregarding the Group's intentions, beliefs, or current expectations concerning,among other things, the Group's and/or the Enlarged Group's results ofoperations, financial condition, liquidity, prospects, growth, strategies andthe industries in which the Group and/or the Enlarged Group operates. By theirnature, forward looking statements involve risk and uncertainty because theyrelate to future events and circumstances. A number of factors could causeactual results and developments to differ materially from those expressed orimplied by the forward looking statements including, without limitation: theCompany's ability successfully to combine the business of the Group and thebusiness of Campbell's UK and to realise expected synergies from thatcombination, conditions in the markets, market position of the Company or itssubsidiaries, earnings, financial position, cash flows, return on capital andoperating margins, anticipated investments and capital expenditures, changingbusiness or other market conditions and general economic conditions. These andother factors could adversely affect the outcome and financial effects of theplans and events described in this announcement. Forward looking statementscontained in this announcement based on past trends or activities should not betaken as a representation that such trends or activities will continue in thefuture. Save as required by law or by the Listing Rules, the Prospectus Rulesor the Disclosure Rules, Premier does not undertake any obligation to update orrevise any forward looking statements, whether as a result of new information,future events or otherwise. Undue reliance should not be placed on forwardlooking statements, which are applicable only as at the date of thisannouncement. No statement in this announcement is intended to constitute a profit forecastfor the financial years ending 31 December 2006, 31 December 2007, 31 December2008 and 31 December 2009 or any other period, nor should any statements beinterpreted to mean that earnings or earnings per Ordinary Share willnecessarily be greater or lesser than those for the relevant preceding financialperiods for either Premier or Campbell's UK. Rather, these statements should beconstrued as references to potential enhancements to the earnings that mightotherwise have been earned during the relevant financial period. Appendix I contains financial information on Campbell's UK. Appendix II contains the definitions of certain terms used in this announcement. Appendix I Financial information on Campbell's UK £ million 12 months ended 9 months ended 31 July 2003 31 July 2004 31 July 2005 30 April 2006 Sales 280.4 274.5 262.7 199.3Cost of sales (199.0) (200.8) (192.1) (144.6)Gross profit 81.5 73.7 70.6 54.7Gross margin 29.1% 26.8% 26.9% 27.4%Distribution expenses (32.4) (32.9) (31.7) (20.8)Administration expenses (15.9) (16.1) (15.5) (8.1)Other operating expenses (3.9) (1.8) (2.2) (1.4)Operating profit 29.4 22.9 21.2 24.4Margin 10.5% 8.3% 8.1% 12.2%Restructuring and 4.3 3.0 2.7 0.3redundanciesManagement charge 5.1 5.2 5.2 4.0Amortisation 16.4 16.4 16.5 12.5Acquired EBITA 55.1 47.4 45.7 41.2Acquired EBITA margin 19.6% 17.3% 17.4% 20.7%Depreciation 8.9 10.6 8.5 5.4Acquired EBITDA 63.9 58.0 54.1 46.5Acquired EBITDA margin 22.8% 21.1% 20.6% 23.3% Appendix II Definitions "Acquired EBITDA" operating profit before interest, tax, depreciation, amortisation, management charges and restructuring and redundancy costs; "Acquisition" the proposed acquisition by Premier of Campbell's UK; "Acquisition Agreement" the transaction agreement between, amongst others, Premier and the Campbell Soup Company relating to the Acquisition, dated 12 July 2006; "Business Day" any day (excluding Saturdays and Sundays) on which banks are open in London for normal banking business; "Campbell's UK" the UK and Irish businesses of the Campbell Soup Company as defined in the Acquisition Agreement; "Completion" completion of the Acquisition in accordance with the terms of the Acquisition Agreement; "Directors" the directors of the Company and "Director" means any one of them; "EBITDA" earnings before interest, tax, depreciation and amortisation; "Enlarged Group" Premier as enlarged by the Acquisition; "Extraordinary General the extraordinary general meeting of the Company, notice of which will beMeeting" or "EGM" contained in the Prospectus; "Hoare Govett" Hoare Govett Limited; "Issue Price" the price payable for each New Ordinary Share under the Rights Issue, to be set out in the Prospectus; "London Stock Exchange" London Stock Exchange plc; "New Ordinary Shares" the new Ordinary Shares to be issued by the Company under the Rights Issue; and "New Ordinary Share" means one of them; "Ordinary Shares" the Ordinary Shares of one pence each in the capital of the Company and " Ordinary Share" means one of them; "Premier" or "the Company" Premier Foods plc; "Premier Group" or "Group" the Company and its subsidiary undertakings and, where the context permits, each of them; "Prospectus" the combined prospectus/circular to be issued by the Company in respect of the Rights Issue and which will contain a notice convening the EGM; "Resolutions" the resolutions to be proposed at the EGM to approve the Acquisition and implement the Rights Issue; "Rights Issue" the proposed offer by way of rights of New Ordinary Shares at the Issue Price on the terms and subject to the conditions to be set out, inter alia, in the Prospectus; "Rothschild" N M Rothschild & Sons Limited; and "Shareholders" the holders of the issued Ordinary Shares from time to time and "Shareholder" means any one of them. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Premier Foods