Premier Foods Plc (LON:PFD) has broadened its breakfast segment with the acquisition of protein-enriched breakfast brand FUEL10K. The deal, worth a cash and debt-free price of £34 million, was finalized on Sunday, October 29, 2023, and is expected to enhance Premier Foods' earnings in the first full year following the acquisition.
The purchase involved an upfront payment of £29.6 million from cash reserves, a minimum deferred payment of £4 million due in 2026-27, and additional payments tied to FUEL10K's sales growth until FY2025-26. The latter are capped at £55 million in total.
This strategic move follows the successful launch of Ambrosia porridge pots by Premier Foods and comes on the heels of its successful integration of The Spice Tailor, which led to a significant revenue boost. FUEL10K, known for its strong double-digit revenue growth over the past three years, reported a pre-tax profit of £0.5 million in the last fiscal year.
CEO Alex Whitehouse sees FUEL10K as an excellent platform for strengthening their breakfast category and anticipates that the brand's protein-enriched offerings and popularity among a younger demographic will fuel future growth and profitability.
Barney Mauleverer, co-founder of FUEL10K, expressed optimism about the brand's future trajectory under Premier Foods' stewardship. He views Premier Foods as the ideal custodian for their brand and is confident about its potential for continued success.
InvestingPro Insights
Looking at the real-time data from InvestingPro, Premier Foods Plc has a promising financial outlook. As of Q2 2023, the company boasts a market cap of $107.48 million and a revenue of $15.59 million, showcasing a revenue growth of 6.4% over the last 12 months. The company has also managed to maintain a 100% gross profit margin, indicating strong financial health.
In line with these metrics, InvestingPro Tips highlight several key strengths of Premier Foods Plc. Notably, the company's revenue growth has been accelerating, and its strong earnings should allow management to continue dividend payments. It's also trading at a low P/E ratio relative to near-term earnings growth, making it an attractive investment option.
For more detailed insights and tips, consider subscribing to InvestingPro's premium service. With over seven additional tips listed for Premier Foods Plc alone, it's a valuable resource for any investor. Visit InvestingPro Pricing for more information.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.