Fuel10K has 31 SKUs across granola, porridge pots, drinks, oat bars and cookies

Premier Foods is set to take on the big players in the breakfast aisles following the £34m acquisition of protein-focused challenger brand Fuel10K.

It builds on the Bisto and Mr Kipling owner’s first footsteps in the category last year when it launched porridge pots under its Ambrosia brand.

Fuel10K has grown rapidly since launching in 2012 and now has 31 SKUs across granola, porridge pots, drinks, oat bars and cookies, with listings in all the major mults.

It registered double-digit revenue growth over the past three years and is projected to turnover £21m for the year ended 31 March 2024.

Premier Foods CEO Alex Whitehouse added the deal followed on from the “successful integration” of The Spice Tailor, which it acquired for £44m in 2022.

“Fuel10K provides us with an ideal platform to accelerate our expansion into the breakfast category,” he said.

“Possessing a differentiated category position, with its protein-enriched product range and appealing to a younger demographic, we expect to deliver significant further profitable growth of Fuel10K through the deployment of our successful branded growth model.”

Co-founders Alex Matheson and Barney Mauleverer will exit the business, handing the leadership to fellow co-founder Jason Kerr, MD Scott Chassels and CFO Matt Gordon.

The business paid employees with at least two years’ service a bonus of a full year’s salary following the deal closing, according to Mauleverer’s LinkedIn.

Peel Hunt head of research Charles Hall forecast Fuel10K to hit revenues of £25m and EBIT of £2.5m in the next three years, with potential for sales to top £50m over the longer term.

“We expect Premier to accelerate growth through its marketing expertise, NPD and ability to expand overseas,” he said.

“The products are currently made by third-party suppliers, and Premier should be able to add its supply chain expertise to improve efficiencies and potentially bring some products in-house as they grow in scale.”

The £34m price tag represented a 1.6x sales multiple on the projected 2023/24 revenues.

Premier will pay Fuel10K £29.6m upfront – funded through its cash reserves – with a minimum of a further £4m payable in the 2026/27 financial year. There is potential for the deal to be worth a maximum of £55m dependent on the business hitting growth targets.

“We are very excited to be passing the reigns on to the owner of such a great stable of UK brands,” Mauleverer said.

“Having built the foundations from start-up, the Fuel10K brand is now primed to accelerate into the future and achieve even more great things. I could not think of a better custodian of our brand than Premier Foods to entrust what we have begun and make the most of such a great opportunity.”

Financial services firm Alantra advised Premier Foods on the deal.

Charles Lanceley, head of UK food & beverage at the firm, added, “Fuel10K has quickly become one of the most disruptive brands in the breakfast category due to its range of innovative protein enriched products and loyal following of consumers. Acquiring Fuel10K provides Premier Foods with a great platform to accelerate its growth in the breakfast meal occasion.”