Shares in Premier Foods were up on the FTSE 250 in morning trading after the group said it would be selling its East Anglian canned grocery operations to Princes Limited for £182 million.
The East Anglian business is expected to report sales of £334 million and EBITDA of £32 million for the full year 2010.
Premier Foods said it would use the proceeds from the sale to pay off debt on its bank facility.
The disposal needs to be approved by Premier Foods' lending banks and shareholders, as well as EU regulators, but is expected to be completed in late March.
Robert Schofield, Chief Executive Officer of Premier Foods, said, "We are pleased to have reached an agreement to sell our canned grocery operations. As a predominantly non-branded business, it has not been an area of focus for us. Selling the Business simplifies our operations and allows us to concentrate our efforts on our current portfolio of great British brands. Combined with the proposed disposal of our Meat-free business, we will have delivered total gross proceeds of £387m, significantly accelerating the delivery of our financial strategy."
Ken Critchley, Managing Director of Princes commented, "This proposed acquisition is an excellent strategic fit for our group and will enable us to further grow our business in the UK and continental Europe by offering our customers a broader range of ambient food products and brands."
By 10:20 shares in Premier Foods were up 0.22 per cent on the FTSE 250 to 22.90 pence per share.