Premier Foods seeks investor for bread unit -source

LONDON, Nov 5 (Reuters) - Britain's Premier Foods (LSE: PFD.L - news) is looking for an outside investor to help its struggling bread division, a source familiar with the matter told Reuters.

Sky News said earlier on Tuesday that the company, which owns a wide range of brands including Hovis and Mother's Pride breads, Mr Kipling cakes, Bisto gravy granules and Sharwoods Asian cooking sauces and foods, has approached private equity groups about the sale of a stake in the bread business, which includes branded flours and other bakery products.

Sky said the group had asked financial advisory firm Ondra Partners to lead the search for an outside investor, adding that options being considered included making the bread business, which includes a separate company owned by Premier Foods and a new investor.

Shares in Premier Foods were up 4.7 percent at 140.25 pence at 1610 GMT. No one at Ondra Partners was immediately available for comment and Premier Foods declined to comment.

Premier Foods' bread business, which also produces own-label ranges for some of Britain's supermarkets, has undergone a major restructuring this year to shrink capacity after losing a number of contracts, closing three bakeries and two mills and changing its logistics network at a cost of 28 million pounds for the full year.

In October the group's chief executive, Gavin Darby, told Reuters he had no plans to sell the Hovis business outright, and was focused on expanding it.

Last month shares in the firm slipped after it reported a sharp slowdown in third-quarter sales, blaming a hotter than average summer in Britain.

Sales in the period at its bread business, excluding milling and other costs, were 1.5 percent behind the same period last year. Overall group revenue fell 3.2 percent to 283 million pounds.