Tasty deal as Premier buys British

The owner of Branston Pickle has stocked up on some of Britain's best known brands after agreeing the £1.2 billion takeover of Hovis owner RHM.

Premier Foods will become the UK's biggest food producer following the tie-up, which adds names such as Mr Kipling and Bisto gravy to a portfolio that already boasts Crosse & Blackwell products and Bird's custard.

With annual sales in excess of £2.6 billion, the proposed company should be in a stronger position with the UK's increasingly powerful supermarket chains.

The merger will produce annual costs savings and other benefits worth £85 million a year, which Premier admitted would involve job cuts.

However, it said it was too early to discuss the impact on the combined workforce. St Albans-based Premier has 3,000 staff, while RHM has more than 15,000 people at 50 locations in the UK and France.

Premier chief executive Robert Schofield said the two companies had been talking for more than a year about a possible merger.

"We've known (for some time) that this is a combination that had to happen. This is a natural combination that has compelling industrial logic."

Premier Foods has been a regular on the acquisition trail since it listed on the stock market two years ago, buying the UK arm of Oxo and Homepride firm Campbell's Soup for £450 million in July.

However, it failed in its effort to buy McVitie's, Penguin and Jaffa Cake owner United Biscuits in a £1.7 billion deal over the summer.

RHM's breads divisions sells products such as Hovis and Mother's Pride, while its culinary brands arm has well-known names such as Bisto, Paxo, Sharwoods, McDougalls and Robertson's. The cakes division is the largest in the UK, with brands such as Mr Kipling, Cadbury's and Lyons.