Shore Capital Sees Strategic Value in Premier Foods’ Merchant Gourmet Seal

Shore Capital has described Premier Foods’ (LON:PFD) £48 million purchase of Merchant Gourmet as a strategically sound move that strengthens the group’s presence in the UK convenience and health-focused food market.

Premier Foods is a “House Stock” at Shore Capital.

In a note following the news this week, the broker called the deal a “nice bolt-on purchase” and “another potentially good one, consistent with Premier’s stated strategy.” 

Premier Foods shares rose 1.2% on Thursday following the news. The stock has gained around 1.3% for the year-to-date.

Analysts Clive Black and Darren Shirley said they expect Premier to leverage its branded growth model to expand distribution and enhance innovation, as it has previously done with The Spice Tailor and FUEL10K.

“We see this acquisition as another potentially good one, consistent with Premier’s stated strategy, which, true to form, should see excellent expanded distribution,” Shore Capital wrote. 

They added that the brand’s premium pulses and grains are well-positioned in the UK market and align with consumer demand for convenience and health.

While the business currently relies on third-party manufacturing, Shore Capital expects Premier to add value through innovation. 

The firm pointed to material shareholder benefits realised in earlier bolt-on acquisitions, where product extensions helped reduce the original entry price multiple.

Shore Capital anticipates a modest contribution in fiscal 2026, with more meaningful earnings impact expected from 2027. 

The analysts noted that the group’s strong balance sheet makes the deal “very absorbable” and that the transaction enhances Premier’s relevance to its core U.K. market.

The broker is keeping financial forecasts unchanged for now, but sees potential upside if the brand can extend beyond the domestic market.