Panmure Gordon says that the recent disposals at Premier Foods do not rule out further divestments in the future.

The food manufacturer announced on Tuesday that it had solid its sweet pickle and table sauces business, which includes the Branston pickle brand, to the Mizkan group for £92.5m.

"This equates to 1.4x sales and 7.9x EBITDA [earnings before interest, tax, depreciation and amortisation] for 2011A and as such represents a better multiple than previous disposals," Panmure said.

While this disposal is not expected to complete until next year, total proceeds from disposals announced since March are £370m, well ahead of the £330m commitment to Premier Foods' banks, the broker highlighted.

"Premier states that it 'can now focus our attention on driving further momentum in our Grocery business and unlocking value in Bread'.

"We don't think this rules out further disposals (such as sweet dehydrated powders for example) and we think no option is being ruled out in Bread, including exiting Milling, looking again at logistics costs, or even selling the business as a whole if a high enough offer is received."

Panmure maintained its 'hold' rating and 90p target price for the stock, saying even after these disposals, the business will remain highly geared with a very large pension deficit "which has to be serviced from a smaller cash generative base".

Shares were trading 5.42% higher at 107p in mid-morning trade.

BC

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