Premier Foods (LSE:PFD) said it will acquire The Spice Tailor (TST), an Indian and South East Asian meal kits brand, for an initial consideration of £43.8mln on a cash free and debt free basis.
Further consideration is dependent on future performance and earn-out structure over a three-year period from fiscal 2023-2024, the company said in a statement.
"This acquisition represents a highly complementary geographical fit, and we see significant potential to expand The Spice Tailor's distribution in all our target markets," said Alex Whitehouse, Premier Foods' chief executive.
TST is expected to generate revenue of £17.3mln in fiscal 2022-2023, with the transaction forecast to be earnings accretive in year one.
According to Premier, if the transaction closes during the financial year ended April 2, 2022, net debt/EBITDA will be flat from the prior year, and the group's net debt/EBITDA target of 1.5x will remain unchanged.
The UK and Australia account for 58% and 35% of TST's annual sales in fiscal 2021, respectively.
TST has experienced a compound anual growth rate of +20% for the past four years, is closely aligned to current consumer trends including convenient home cooking, and is complementary to the group's Sharwood's and Loyd Grossman brands, Premier Foods said, adding with a presence in UK, Australia, Canada and Irish markets, it will significantly expand the group's ethnic foods business in Australia.