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Asian suitors and Kraft may move for United Biscuits as split rumours rife

By Oliver Nieburg , 21-Dec-2011

UK-based United Biscuits (UB) may have attracted bidders from Asia and major companies like Kraft and PepsiCo amid rumours the company has split its operations into a snacks and biscuit division, according to an analyst.

Global food analyst at Mintel Marcia Mogelonsky told BakeryAndSnacks.com that there was a strong possibility that UB had divided its business and that large multinationals were circling.

Split rumours

Fresh rumours surfaced last week in the British national press that UB had divided its operations into a snacks and biscuit division as it allegedly prepared to offload parts of the company.

Mogelonsky said that talks of a UB split had been on-going for some time

“Indeed there was an ill-fated effort by China's Bright Foods to buy the UB biscuit brands last year,” she said.

“Rumours are circulating again, and on the heels of Kraft's decision to split (and the potential for PepsiCo to do so as well), the possibility is strong that UB will be split into two parts.”

A UB spokesperson declined to comment and said "we don't comment on market speculation".

Asian interest

According to Mogelonsky the two divisions, will have appeal to two different buyers.

“Given the current economic situation -and the ongoing potential for anti-trust issues - the buyers (and there will be at least two) will likely come from Asia.”

Mogelonsky’s opinion echoes that of Julian Wild, food group director at law firm Rollits, who recently told our sister site FoodManufacture.co.uk that bidders were likely to come from the Far-East.

Mogelonsky said the likeliest suitor for the biscuit side was Asian confectioner Lotte.

“Lotte has made a number of moves in Europe lately and it may be looking to capture more of the western market,“ she said.

However she added that since Bright had lost out last year, it was probably out of the running and now looking to Australia for its expansion efforts.

Kraft and PepsiCo

Mogelonsky also did not rule out potential bids from food giants Kraft and PepsiCo

“With Kraft's split, its new international snacks and biscuit company could be a buyer but only if it could avoid anti-trust issues and that is a big 'if’,” she said.

PepsiCo, which is working through the mechanics of splitting its beverage and foods divisions, may contemplate a buy, but on the heels of their Argentinian Dilexis deal, they may be holding off on expanding their biscuit side again,” she continued.

She said it was also likely that "off the radar" companies outside the food industry could be manoeuvring behind the scenes, such as a private equity firms.

Future of UB

Asked what any sale would mean for the future of UB, Mogelonsky said: That, of course, will depend on the deals that are worked out. For the most part, it is likely that regardless of buyers, the strong brands that distinguish UB will remain in place. There is little to be gained otherwise.”

“We hope that, regardless of the deals, there will be less public acrimony than we saw after the Kraft-Cadbury deal, fallout from which is still on-going. But, whenever there is a transition when a company as big as UB is in play, it will not be seamless and significant change will be inevitable,” she said.

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