If it goes ahead, Premier's acquisition of RHM is an exciting prospect. It brings together many of Britain's best-known food brands, and with his old alma mater, United Biscuits, reportedly still in his sights, you can expect lots of headlines about Premier in The Grocer in the next year.
It's not hard to see the logic of the RHM deal. Schofield has promised savings of £85m to the City, so it's a fair bet he's spotted £125m, which makes for a meaningful profit. The prospect of growing the business, stretching his new brands (as he has done so brilliantly with Branstons this year), and migrating some of them into fresh and chilled, is also intriguing.
But Schofield ain't going to have it all his own way. Let's first of all put the scale of the deal in context. Schofield has persuaded the City that Premier is now the biggest food manufacturer in Britain. What about ABF, the £6bn-sales conglomerate, whose £559m profit is not far shy of the total sales of Premier - and whose grocery interests alone amount to £2.65bn?
I read that with £2.25bn in grocery sales Premier will be able to negotiate better terms with multiples. But as one buyer told me this week, "we shall see about that".
Premier does have category scale in spreads and preserves, with RHM's Robertson's joining Hartley's, Chivers, Sun-Pat and Gayle's, but even here there's no premium product to wrap up the category. RHM is also in a commodity hole with its bread division, with Hovis a long way behind Warburtons in terms of quality and market share. And though most of the problems at Mr Kipling have now been resolved, the cakes division, which relies on a lot of own-label work, is up against a number of foreign players like Interlink, who are sourcing cheaper product from Eastern Europe and the Far East. Oh, and the unions are also kicking up a stink.
It's not hard to see the logic of the RHM deal. Schofield has promised savings of £85m to the City, so it's a fair bet he's spotted £125m, which makes for a meaningful profit. The prospect of growing the business, stretching his new brands (as he has done so brilliantly with Branstons this year), and migrating some of them into fresh and chilled, is also intriguing.
But Schofield ain't going to have it all his own way. Let's first of all put the scale of the deal in context. Schofield has persuaded the City that Premier is now the biggest food manufacturer in Britain. What about ABF, the £6bn-sales conglomerate, whose £559m profit is not far shy of the total sales of Premier - and whose grocery interests alone amount to £2.65bn?
I read that with £2.25bn in grocery sales Premier will be able to negotiate better terms with multiples. But as one buyer told me this week, "we shall see about that".
Premier does have category scale in spreads and preserves, with RHM's Robertson's joining Hartley's, Chivers, Sun-Pat and Gayle's, but even here there's no premium product to wrap up the category. RHM is also in a commodity hole with its bread division, with Hovis a long way behind Warburtons in terms of quality and market share. And though most of the problems at Mr Kipling have now been resolved, the cakes division, which relies on a lot of own-label work, is up against a number of foreign players like Interlink, who are sourcing cheaper product from Eastern Europe and the Far East. Oh, and the unions are also kicking up a stink.
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