14 December 2006

Premier Foods is aiming to become the lowest-cost food supplier to retailers, following its takeover of rival food manufacturer RHM.

The news comes as Premier's £1.23 billion bid for the company was accepted by RHM, creating the largest food supplier and producer in the UK.

A spokesman for Premier said the deal would give it "the opportunity to redefine the strategic partnerships with retailers".

Premier said the increased size of the company would allow it to become the lowest cost supplier, generate more funds for innovation and marketing and invest in new technology.

The fate of the two companies' procurement departments, however, remains unclear. Premier, whose head of procurement is Robert Lawson, said there was bound to be some duplication when integrating two businesses.

It said it was too early to say what would happen and it would try and keep as many good people as possible.

A spokesman for RHM said Mark Hughes, procurement and logistics director, would continue in his role until the takeover was completed in March.

He also said RHM's procurement cost savings programme, which saved £8 million in the first half of 2006, would continue until then.

SMdec2006