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Branston firm's £1.2bn Oxo buyout Branston firm's £1.2bn Oxo buyout
(10 minutes later)
Premier Foods, the owner of brands such as Branston sauces and Ambrosia Creamed Rice, has agreed to buy rival RHM for £1.2bn to become the top UK food firm.Premier Foods, the owner of brands such as Branston sauces and Ambrosia Creamed Rice, has agreed to buy rival RHM for £1.2bn to become the top UK food firm.
RHM's board has approved the deal that will bring together names such as Hovis bread, Mr Kipling cakes and Oxo gravy.RHM's board has approved the deal that will bring together names such as Hovis bread, Mr Kipling cakes and Oxo gravy.
The merged company will have annual sales of £2.6bn, with 93% of those revenues coming from the UK.The merged company will have annual sales of £2.6bn, with 93% of those revenues coming from the UK.
Premier will pay a mixture of cash and new shares in a deal that values RHM stock 30% higher than its Friday close.Premier will pay a mixture of cash and new shares in a deal that values RHM stock 30% higher than its Friday close.
Shares soarShares soar
News of the deal sent shares in both companies up sharply.News of the deal sent shares in both companies up sharply.
RHM shares soared 35% in early trading while Premier's shares rose 8%.RHM shares soared 35% in early trading while Premier's shares rose 8%.
The management might be too keen to do a deal after failing to get United Biscuits Clive Black, Shore Capital See Premier Foods sharesThe management might be too keen to do a deal after failing to get United Biscuits Clive Black, Shore Capital See Premier Foods shares
Premier said it would pay one new share and 83.2 pence in cash for each RHM share, working out at about 352.45p for each RHM share.Premier said it would pay one new share and 83.2 pence in cash for each RHM share, working out at about 352.45p for each RHM share.
The purchase still needs to be approved by shareholders of both companies.The purchase still needs to be approved by shareholders of both companies.
"This acquisition provides a unique opportunity to combine two of the UK's leading food companies," Premier chairman David Kappler said."This acquisition provides a unique opportunity to combine two of the UK's leading food companies," Premier chairman David Kappler said.
Earlier this year, Premier said that it was looking at acquisition targets and formed part of a group that tried, and failed, to buy United Biscuits.Earlier this year, Premier said that it was looking at acquisition targets and formed part of a group that tried, and failed, to buy United Biscuits.
Too greedy?Too greedy?
Some analysts questioned the price that Premier was paying for RHM.Some analysts questioned the price that Premier was paying for RHM.
"The management might be too keen to do a deal after failing to get United Biscuits," said Clive Black, an analyst at Shore Capital."The management might be too keen to do a deal after failing to get United Biscuits," said Clive Black, an analyst at Shore Capital.
RHM has seen demand for some of its products decline, hit by a slowdown in the market as a whole, and previously said that it expected turnover from cakes to drop by 12% in the six months to the end of October. RHM has seen demand for some of its products decline, hit by a slowdown in the market as a whole.
It previously said that it expected turnover from its cakes business to drop by 12% in the six months to the end of October.