Kraft bid for British snackmaker unlikely

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Rumours of Kraft Foods' buy-out of United Biscuits are downplayed
by sources close to the company.

Bankers yesterday downplayed the likelihood of North America's largest food maker Kraft Foods making a bid for Britain's United Biscuits, as reported in Britain's The Business​ newspaper on Sunday.

Shares in Kraft fell two per cent on Monday on the report Kraft had approached United Biscuits' owners with a buy-out plan that would value the company at up to 2.4 billion pounds (€3.85 bn).Kraft shares were down around half a per cent to $40.40 at 1600 GMT on Tuesday.

Kraft was not immediately available for comment but sources close to the company said they were unaware of any bid plan.

Cinven, the private equity firm which jointly led the €2.9 billion buyout of United Biscuits from French food group Danone in 2000 declined to comment.

United Biscuits's other shareholders, DB Partners and Paribas Affaires Industrielles, the private equity units of Deutsche Bank and BNP Paribas respectively, were not available for comment.

Bankers said while Kraft might be interested in the United Biscuits brands, the owners would be not be keen to sell now.

"I would be surprised frankly if this was the right time for a deal,"​ said one banker.

Sources familiar with United Biscuits said its owners would probably seek to grow the business over the next year or so and then sell. Private equity firms commonly invest in companies for between three and five years.

"The owners of United Biscuits have a very good understanding of the growth and profitability gains that the company can make in the coming year or so,"​ another source close to United Biscuits added.

The Business​ also reported the owners of United Biscuits had considered floating the company, however bankers said a trade sale was more likely.

Kraft has a 26.51 per cent stake in United Biscuits, which it got through its takeover of Nabisco, and this holding gives it an option until March 2003 to match any other bids for United Biscuits.

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