October 18, 2010 / 10:22 PM / in 8 years

UPDATE 1-Premium Brands buys SK Food Group for C$42.5 mln

* Deal to immediately add to EPS, cash flow per share

* Says SK Food has annualized sales of about C$90 mln

Oct 18 (Reuters) - Premium Brands Holdings Corp (PBH.TO) said it bought specialty sandwich maker SK Food Group Inc for about C$42.5 million, the fourth deal this year for the Canadian food products maker.

Premium Brands will pay C$18.4 million in cash and issue 491,898 shares valued at C$6.8 million.

The deal value also comprises C$6.5 million in vendor take-back notes due March 31, 2011, and C$10.8 million in vendor take-back notes payable over the next three years, both contingent upon SK Food reaching certain profitability targets.

Premium Brands expects the deal to immediately add to its earnings per share and cash flow per share.

SK Food makes breakfast sandwiches and wraps and sells to customers across the United States and Canada. It has annualized sales and earnings before interest tax, depreciation and amortization run rates of about C$90 million and C$8.1 million, respectively.

In July, Premium Brands said it would buy 76 percent interest in privately held Maximum Seafood to extend its geographic reach. [ID:nN05210610]

Premium Brands’ shares, which have gained 11 percent in value since the company announced the deal with Maximum Seafood, closed at C$13.95 Monday on the Toronto Stock Exchange. (Reporting by Isheeta Sanghi in Bangalore; Editing by Anne Pallivathuckal)

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