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STOCKS NEWS UK SMALL-Premier rises on Mr Kipling sale talk
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09:35GMT 17Nov2008-Premier rises on Mr Kipling sale talk
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Shares in Premier Foods (LSE: PFD.L - news) rise 25 percent to 33.75 pence as The Sunday Telegraph reports United Biscuits (UB) is interested in buying the group's Mr Kipling Cakes Division. Premier's chief executive, Robert Schofield, is understood to have rebuffed private equity-owned UB, leaving the biscuit group weighing a direct approach to banks or shareholders.
'We think that Kipling is a useful illustration of the potential benefits to Premier's valuation from disposing of a 'crown jewel',' says Investec (LSE: INVP.L - news) analyst Martin Deboo, who estimates the division could have a disposal value of about 200 million pounds.
'While this deal would almost certainly be dilutive, this would be more than compensated by the benefits of increased covenant headroom.'
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