PREMIER FOODS is preparing to dish up a £400m (€578m) share issue as it nears a deal to buy the UK and Irish operations of the Campbell Soup Company. The deal will include Campbell’s Erin Foods division.

Robert Schofield, chief executive of Premier, has asked Merrill Lynch to arrange the potential fundraising.

Although Premier, which is valued at £772m, has no period of exclusivity within which to secure a deal with Campbell’s, which is being advised by Goldman Sachs, sources said an agreement could be clinched this week, valuing the Campbell’s assets at about £450m.

RHM, the rival food company, and private-equity groups such as Lion Capital, Doughty Hanson and Bain Capital, are thought to be among the other bidders. Campbell bought Erin Foods from Greencore for $26m (€20.3m) in 2002.

Schofield’s fundraising plans could be expanded if Premier also secures a deal to acquire the UK arm of United Biscuits (UB). NM Rothschild is advising Premier on both.

This weekend, Kraft, the US food giant, was close to snapping up UB’s southern European assets for about £570m. The American company, which is one of UB’s shareholders, had been part of a break-up consortium alongside Premier and NPM Capital, the Dutch private-equity group.

Premier’s appetite to do deals has been fuelled by the strong performance of Quorn, the meat substitute brand that it bought last year. Schofield revealed at Premier’s half-year trading update last week that Quorn had recorded double-digit sales growth during the first six months of 2006.

The Campbell’s and United Biscuits auctions reflect a frenetic period of corporate activity among British food producers.

Unilever recently hoisted the For Sale sign above its European frozen-food business, which has prompted a wave of interest from buyout groups.

CapVest, the owner of the Findus and Young’s Seafood frozen-food businesses, has teamed up with CVC Capital Partners and Kohlberg Kravis Roberts to bid for the Unilever arm. They are being advised by Deutsche Bank and Merrill Lynch.

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