In a move that has caught market analysts by surprise, UK based snack and biscuit maker, United Biscuits, is reportedly close to a deal with leading Chinese food group Bright Food in terms of a buy out.
The Chinese company is said to have pre-empted a planned auction this autumn and put in a bid of over €2.4bn for the biscuit-maker, which is owned by the US and French private equity partnership of Blackstone and PAI Partners, according to a report in the Sunday Times.
A spokesperson for Blackstone told BakeryandSnacks.com that she was not in a position to comment on the media speculation about the deal at this stage.
United Biscuits (UB) saw good performance last year with revenues of £1.26bn but had a tougher time of it in 2010 with aggressive targets set by its owners. Rumours of a possible sale of the business have been circulating since July.
And Clive Black, an analyst at Shore Capital, observed in the Financial Times that the market had not anticipated an offer from the Shanghai based group. Analysts had placed the spotlight solely on leading US snack and food groups and UK competitors as the likely bidders for Jaffa Cake and Hula Hoops maker.
Sugar deal lost
Bright Foods, which has a canned food division and a confectionary business that makes a popular Chinese brand of sweets called White Rabbit, recently lost a bidding war for Australian sugar refiner CSR. The Chinese group generated sales of more than 76 billion yuan in 2009.
The conglomerate was formed three years ago when the Shanghai municipal government announced it was merging Shanghai Bright Dairy Group, the holding company for Bright Dairy, with Shanghai Sugar Tobacco and Jinjiang Food.
The new group, named Bright Food, is managed by Shanghai's local administration and the state-owned assets supervision and administration commission.
United Biscuits (UB) holds the leading or number two positions in its core markets of the UK, the Netherlands, France, Belgium and Ireland while growing rapidly in North America, the Middle East, Africa and Australia.
Both biscuits and savoury snacks are buoyant markets globally and Leatherhead predicts that both will be rising in value by more than 5 per cent globally up to 2012, with strong growth potential in emerging markets.
The acquisition, say industry insiders, would therefore allow Bright Foods to gain a foothold in a range of markets as well as a providing it with a platform for marketing its own food and dairy range.
Last month, it was also reported that US group Campbell Soup Company was considering making a move on the biscuit arm of UB. Splitting the two sides of the company had been put forward as possible options back in July, with market analysts then assessing the opportunties for potential buyers.
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).”
Brockman last month said that 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.”
Premier Foods, Nestle, PepsiCo as well as the UK firm, Burton’s Biscuits, have also been lined up as possible bidders for United Biscuits.
In terms of union response to the news that may be put up for sale, Alan Black, GMB national officer said: "We hope that United Biscuits is bought by a company that has an established, successful food manufacturing background and record.
In the event of a sale, GMB will be look to establish a positive working relationship with the new owners in the interest of improving and defending our members' job security, pay and conditions of employment."