Campbell Soup may bite into United Biscuits

Last month it was reported that the owners of United, Blackstone Group and PAI Partners, were sounding out investment banks for advice regarding an auction in the autumn for the snack and biscuit maker.

Now the Sunday Times has reported that Campbell is taking advice from Centerview Partners, a US boutique investment bank, about whether to launch a £1.5bn break-up bid for the biscuit side of the business.

Splitting the two sides of the company had been put forward as one possibility when rumours of a possible sale circulated in July.

International opportunity ​

At the time, Chris Brockman, market intelligence manager at Leatherhead, told BakeryandSnacks.com: “It would be feasible to split the biscuits business which is quite international (McVities plus the European biscuit brands such as Delacre, BN, Verkade) from the more UK orientated snack business (McCoy’s, KP, Hula Hoops).” ​

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Today Brockman explained why he thought Campbell would be interested making an offer just for the biscuit brands. The analyst said: “Campbell’s own Pepperidge Farm in the US – the third largest biscuit player in that market with a range encompassing cookies and crackers. But Pepperidge is not a global player and UB’s biscuits business would give it a much wider global footprint to compete with the dominant global leader Kraft.” ​

In addition, Brockman said an acquisition would give each company access to the others network in different countries and offer up opportunities for cost savings in terms of production and sales and marketing.

UK-centric snacks​

Unlike the biscuit portfolio, the snacks business is very UK-centric. Although it contains some powerful names on the domestic market, Brockman said it may not be such an attractive proposition for an international company “looking to build its global footprint with global brands”. ​

Other names that analysts have named as potential big bidders for United include Kraft, PepsiCo and Kellogg.

United Biscuits was founded in 1948 following the merger of two Scottish businesses, McVitie & Price and MacFarlane Lang. The company then moved into nuts and crisps 20 years later and was bought up by the private equity firms, Blackstone Group and PAI Partners, in 2006 for £1.6bn. Last year United achieved revenues of around £1.26bn.

Both biscuits and savory snacks are buoyant markets and Leatherhead predicts that both will grow in value terms by more than 5 per cent globally up to 2012, with strongest growth predicted in emerging markets.