Slaughter and May is advising Premier Foods plc (Premier Foods) on a conditional agreement with Specialty Powders Holdings Limited (Specialty Powders) to manufacture and pack powdered beverages and desserts at Premier Foods' Knighton facility in Staffordshire. The joint venture will trade under the name of Knighton Foods.
Under the agreement, which was announced on 18 June 2014, Specialty Powders will contribute its wholly-owned businesses, Phoenix Foods and Agglomeration Technology, to the joint venture in consideration for (amongst other things) a 51% controlling stake in the joint venture. Premier Foods will contribute its Knighton site and related assets (which are valued at approximately £15 million) to the joint venture, together with approximately £16 million of private label and business-to-business sales of powdered beverages and desserts, in consideration for a 49% stake in the joint venture and a promissory note.
The agreement will also enable the transfer of two production lines from Knighton to Premier Foods' manufacturing plant in Ashford, Kent, resulting in significant further efficiencies in Premier Foods' broader grocery manufacturing infrastructure. Premier Foods will retain the substantial majority of its branded sales currently made at Knighton, including under 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.
Completion of the transaction is conditional upon the repayment in full of Specialty Powders' existing debt and the joint venture's entry into new specified financing arrangements.
The transaction is expected to complete prior to the end of June 2014.
CONTACTS
Corporate and Commercial: Michael Corbett (partner), Ross Davies (associate), Shawn Carrington (associate); Tax: Mike Lane (partner), Shofiq Miah (associate); Financing: Robert Byk (partner), Norah Ali (associate); Real Estate: John Nevin (partner), Krishnan Patel (associate), Kate Turner (associate); Intellectual Property: Cathy Connolly (partner), Laura Houston (associate)
