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UB acquisition by Kellogg makes sense, says expert

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By Rod Addy+

Last updated on 08-Aug-2014 at 13:01 GMT

UB ceo Martin Glenn has presided over major investment in the business since he joined last year
UB ceo Martin Glenn has presided over major investment in the business since he joined last year

Kellogg buying United Biscuits would make sense, according to an expert with prior senior history at UB, as media speculation over the possibility of such a deal intensified.

Robert Lawson, co-founder of Food Strategy Associates, former strategy director at UB and former global director strategy, snacking at Kraft International, told “UB in the past few years has sold KP Snacks, focused on biscuits, invested in its brands and made smart acquisitions and investments in emerging markets which make it a much more attractive strategic asset. 

“For Kellogg, as for other aspiring multinational biscuit companies, acquiring UB would be a major step forward to creating a challenger to Mondelēz in the global baked snacks categories.”

Lawson said an initial public offering, where a tranche of a company’s shares are put up for sale to the public on the stock market “remains a realistic option for UB”, adding: “The business today is very different to the one that left the stock market in 2000. Leaner, stronger brands, a more focused geographic and product portfolio.”

£2bn offer

Sky News claimed that Kellogg had appointed investment bankers at Barclays to assess a £2bn offer for UB , which makes brands including Jaffa Cakes and Twiglets.

That followed news that private equity groups Blackstone and PAI Partners, owners of UB, had hired Goldman Sachs and JP Morgan to prepare a stock market flotation for the firm.

Similarly, a Reuters news report cited a source confirming that Kellogg was exploring a bid for UB. However, that article said that matters were at such an early stage that the two companies had not yet entered negotiations.

Kellogg, Barclays and UB have all declined to comment on the speculation.

Potential bidders

Other names cited as potential bidders for UB are China’s Bright Foods, which bought Weetabix in May 2012 . However, understands interest from that quarter may have cooled.

There were rumours that Kellogg had previously considered an offer for UB, but had rejected the possibility prior to its purchase of Pringles in 2012. It bought US cookies and savoury biscuits firm Keebler Company in 2001, so has extensive expertise in the biscuit industry.

Since Martin Glenn took over as ceo of UB on May 6 2013 , the company has embarked on a major investment and innovation campaign. In January, it announced a £12M marketing initiative to revitalise its McVitie’s brand and in April it unveiled a £10M marketing drive to boost its savoury biscuits market share, spearheaded by its Jacob’s brand .

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