Premier Foods is chewing over the sale of its loss-making own-label chilled foods and cake businesses RF Brookes and Avana Bakeries but the list of ­potential buyers is short, claim City sources.

Stamford Partners is understood to be advising Premier on a possible sale of the unit, which last month lost a £30m contract to supply Marks & Spencer with own-label pies.

Brookes Avana secured new business from other customers, but in a profit warning last week Premier admitted the unit would record a £10m decline in profit year-on-year in the first half. Brookes saw profits collapse from £15m to zero last year as it struggled to pass on price rises.

Speculation about a disposal of Brookes Avana has circulated for several years, but poor trading is believed to have hampered a deal. However, with tightened finances, management is tentatively tapping up buyers again. "There is not a great deal of firm interest," said one industry source. "Greencore is the favourite it needs a deal. But Premier was looking for £150m only a few years ago. They'd be lucky to get half that now."

Premier last week confirmed a pricing dispute with Tesco had cost it £10m, following a Grocer investigation into product delistings. It ­refused to ­comment on the sale.