PREMIER Foods has agreed to sell a controlling interest in its bread making division to a US private equity firm.

The deal involves a joint venture, called Hovis Limited, being formed with Gores Group, owned by billionaire Alec Gores. It could see up to £200 million of investment being pumped into the business over the next five years.

Around 4000 employees across 10 bakeries and five flour mills in the UK are expected to transfer over as part of the transaction.

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That includes more than 470 Scottish staff, made up of 256 at the Duke Street bakery in Glasgow, 175 at Mossend in North Lanarkshire and 45 from the Fleming Howden distribution arm at Newbridge, near Edinburgh.

Gores, which has its main base in Los Angeles, is paying £30m to take a 51% stake in the maker of brands such as Hovis, Nimble and Mothers Pride, although half of that sum is dependent on how the venture performs.

The bread division was said to have unaudited sales of more than £654m in 2013, a trading profit of £6.3m and gross assets worth in excess of £240m.

According to Premier Foods the deal values its bread business at an enterprise value of £87.5m. It said it would see short-term cash benefits of £28m, which it planned to invest into its grocery division that has brands such as Mr Kipling, Angel Delight and Bisto.

There is also to be £20m spent on a new cake slicing line in Barnsley.

Premier Foods added that it would meet market expectations for 2013 with a lower than expected interest charge helping to boost profits.

Shares closed down 1.5p, or 1%, at 142.25p.