Mr Kipling sale is tempting treat as shareholders losses leave sour taste

Mr Kipling

Premier Foods is exploring a potential sale of Mr Kipling cakes as it presses ahead with a review under pressure from activist shareholders.

Selling Mr Kipling, part of a larder of brands that also includes Angel Delight and Bisto gravy, is one of several options under consideration by the consumer goods group, which embarked on a self-evaluation exercise in February.

Premier Foods is under pressure from Paulson and Oasis, two of its largest shareholders that between them own about 20 per cent of the shares and this year secured seats on the company’s board.

Mr Kipling was created in 1967 and is one of Premier Foods’ best-performing lines. The brand, known for its “exceedingly good cakes” advertising catchline, lifted its revenues by 12 per cent over the year to the end of March, helped by an updated design and a television marketing campaign.

No firm buyer is believed to have been lined up and Premier Foods may yet decide to retain Mr Kipling, but if a formal sale process were to begin, it is thought that the brand would attract considerable interest, mainly from other parties in the sector.

Premier Foods was founded in 1975 as Hillsdown Holdings and is based in St Albans, Hertfordshire. It makes five categories of food: flavourings and seasonings, cooking sauces, quick meals and snacks, desserts and cakes. Its large range of brands also includes Oxo cubes, Loyd Grossman sauces, Smash mashed potato, Ambrosia creamed rice and Cadbury puddings and cakes.

Formerly owned by Hicks, Muse, Tate and Furst, the private equity investor, the company listed its shares in 2004. It now has a market value of just over £300 million and last year made revenues of £824.3 million, though it fell to a statutory pre-tax loss of £42.7 million because of pension and other costs.

This year Premier hired d’Angelin, the boutique advisory firm, to help with its strategic review, fuelling speculation that it was moving towards a full-scale break-up. In November, it told shareholders that it was considering the sale of Ambrosia, but canned the process in February after failing to agree a satisfactory price with potential buyers.

Premier Foods declined to comment.