Premier snaps up Quorn for £172m

MEAT-FREE foodstuff producer Quorn has joined a clutch of other household name brands - Ambrosia desserts, Hartley's jams, Typhoo tea and Branston pickle - in the Premier Foods stable in a deal worth £172m.

The acquisition of Quorn from venture capital house Montagu Private Equity is Premier's largest single deal. It will herald a new advertising blitz that will see Quorn move from being aimed at vegetarians to targeting the healthy-eating market in general.

'We will be repositioning and modernising the brand,' said Premier chief executive Robert Schofield, who confirmed new ads will not go back to using 1990s sport stars like rugby's Will Carling and athletics star Sally Gunnell. He also brushed aside controversies about allergic reactions produced by Quorn.

'We have absolutely no worries, he said, adding; 'Food intolerance in Quorn is one in 145,000. In soya it is one in 300 and in shellfish one in 150.'

Quorn was launched in 1985 by ICI, which developed the meat substitute from fungi found in North Yorkshire. Since its UK launch a decade ago, Quorn has become the UK's largest meat alternative brand with annual retail sales of £95m. It initially targeted vegetarians but has recently been boosted by the trend towards healthier eating and lower meat consumption. It is used in a range of products including burgers, sausages, mince, cottage pie and cold deli slices. It has a 60% share of the £155m alternative meat market in the UK and also has leading positions in Switzerland, Belgium and Holland.

Former ICI subsidiary AstraZeneca sold the company to Montagu two years ago for £100m. Today's cash deal lifts Premier's debt facilities by a third to £780m and values Quorn at 11 times last year's underlying earnings, though it is 37 times £4.6m pre-tax profits last year. Sales were £79m.

The deal is one of Premier's first since listing on the stock market in July with a value of £527m. It also bought brands such as Bird's Custard and Angel Delight from US giant Kraft Foods in December. Marlow Foods will be operated as a standalone business, run by its existing management team, although the deal is expected to bring savings of about £4m a year by 2008 in areas such as administration and purchasing.No major job losses are expected among the 360 staff employed at its headquarters in Stokesley and its other site in Belasis, Teesside.