Grandmet Sale

Grand Metropolitan, the UK food and drinks group, said on Friday it was close to selling two European food businesses to US-based Sara Lee Corporation. It is thought that it could receive up to £30 million for Brossard in France and Fida in Italy "� which reported combined turnover of about £120m last year. Their profits were not disclosed. A loss on the sales is likely., but the company said this had been taken account of in a £207m goodwill write-off announced last year. The deal, expected within the next few weeks, will mark GrandMet's exit from domestic brands in continental Europe. It follows the sale of businesses in Germany, the Netherlands and Belgium, and allows the company to throw all its marketing resources behind four international brands - Pilsbury, Green Giant, Häagen-Dazs and Old El Paso. GrandMet has also put up for sale four UK businesses, including the 200-year-old Shippams paste brand. Taken together, the string of European domestic brands made operating profits of £10m on sales of the year to September 1995. Analysts welcomed the imminent sale of Brossard and Fida. Mr James Norman at BZW said: ''We regard this as a healthy line drawn under the past. Many of these businesses were bought in the belief that the brands could cross boundaries, which they didn't.'' The disposals, combined with improvements in cash flow, could reduce net debt from £2.4bn to £2.3bn by this September, BZW said. The improved position could improve the prospect of a share buy-back, a possibility raised by Mr John McGrath, chief executive, last year. Copyright Financial Times Limited 1997.