Premier Foods (PRRFY) posted their biggest gain in nearly three week Monday after it said it had renewed a key licensing agreement with Cadbury chocolate owner Mondelez (MDLZ) .
Britain-based Premier Foods produces and markets Cadbury-branded cake and ambient dessert products -- or treats that can be stored at room temperature -- on behalf of Mondelez, which was spun from Kraft Foods back in 2012. Once finalized the deal will run until 2022, with an option to extend to 2025, subject to meeting certain performance criteria.
"This deals with what has been something of an overhang on the shares, where the Cadbury licence has been operating on a rolling 12-month basis, leading to some uncertainty and lack of revenue visibility," Jefferies Analyst Martin Deboo said in a Monday note. "We estimate the sales under the licence to be c. £60 million or c.8% of PFD Group."
Premier Foods shares were marked 2.33% higher, the biggest single-day gain since April 19, and changing hands at 44 pence a share, extending a more than 11% gain over the past three months and outpacing a 3.45% gain of the FTSE 350 Food & Drug index.
The number of licensed countries will extend to 46, moving beyond the core licensed territories of the U.K., Ireland, Australasia and United Arab Emirates.
