Food giants weigh their appetite to bid for Ambrosia
DAIRY Crest, whose stable of food brands includes Cathedral City cheese and Clover margarine, is among a string of firms interested in gobbling up custard and rice pudding maker Ambrosia after it was put up for sale earlier this month.
Ambrosia owner Premier Foods has reputedly been asking for bids of more than £100million, according to food market sources.
Other interested parties are believed to include German yogurt maker Müller and Ireland-based manufacturer Kerry Foods. The companies declined to be drawn on their interest and Müller said it did not comment on ‘speculation’.
Premier Foods has raised the ‘for sale’ sign above Ambrosia as part of a business review and a renewed effort to reduce company debt.
‘There isn’t likely to be a huge number of potential bidders for Ambrosia but the market specialists will see the value and are the ones that will be able to make it work,’ said one City source. Ambrosia was founded in Lifton, Devon, in 1917 where is continues to be based. City investors hope money raised will be used to help slash the company’s £509million debt.
Analysts say net debt is almost £1 billion when the company’s pension deficit is taken into account.
Selling Ambrosia will allow Premier Foods to focus on its other brands which include Mr Kipling, Bisto, Angel Delight, noodles brand Batchelors and the licence to produce Cadbury’s cakes.
Premier Foods chief executive Gavin Darby – who survived an effort by rebel shareholders to topple him as recently as July – plans to leave as part of the overhaul. A clash with a US suitor McCormick in 2016 undermined Darby’s reputation and subsequently led to a slump in the share price. McCormick ultimately dropped its £1.5 billion takeover proposal, worth 65 pence a share, amid intense criticism of the board for so readily rejecting the initial overtures.
But Martin Deboo, an analyst at broker Jefferies, said Darby has made a made a positive contribution to the firm’s ‘culture and competitiveness’ during his six years at the helm.
He said fresh management led by Keith Hamill, who was appointed after the bid fiasco, could help revive the company’s share price.