Danone changes Irish partner

Related tags Ub United biscuits

Just 10 days after agreeing to sell its Irish Biscuits unit to
Britain's United Biscuits, French group Danone has changed its mind
and sold the business to local player Fruitfield Foods instead -
neatly avoiding a potentially lengthy investigation by the
competition authorities there.

On 23 July, Danone announced​ that it was selling its Jacob's business in the UK and Ireland to United Biscuits, subject to approval from the market regulators. However, the agreement with UB also allowed Danone to sell the Irish assets to a different company during a limited period before the final deal was agreed - a clause designed to ensure that the business could be sold with the minimum of regulatory fuss.

UB is the biggest biscuit maker in the UK, with a number of major brands such as McVities and Penguin, while Jacob's is the biggest biscuit maker in Ireland, with sales of around €70 million and a portfolio of brands including Kimberley, Mikado and Jacob's Fig Rolls.

Fruitfield Foods, a privately owned food manufacturer, has no existing biscuit operations, and therefore has no regulatory issues, allowing it to become effective immediately - and letting Danone pocket the (undisclosed) proceeds to boot.

UB has not commented on the decision not to sell the Irish unit along with the British one, but the let out clause in the agreement suggests that it was aware that such a move might take place and relatively unconcerned by it.

But it must also feel that the fact that Jacob's business in the UK is predominantly savoury-based (the core brands are Cream Crackers, Twiglets and TUC, although the Iced Gems brand is a major player in the sweet segment) will allow it to bypass most of the regulators' concerns there as well: UB's business is predominantly focused on sweet biscuits, although it does own the KP, Hula Hoops and Mini Cheddar savoury brands.

Although its plans to push further into Ireland now appear to have been scotched, UB has pushed into a number of other European markets with more success. It is the number one biscuit maker in Spain, where it owns the Fontaneda brand, and the number two in France (Delacre and BN) and the Netherlands (Verkade).

The approval of UB's acquisition of Triunfo Productos Alimentares - Portugal's top biscuit player - was this week approved by the Portuguese Competition Authority, making it the biggest player in that market as well with sales of around €75 million forecast for 2004 and a market share of 39 per cent.

Malcolm Ritchie, chief executive of UB, said that the Portuguese deal would give UB access to a strong portfolio of brands with good potential for crossing over to other European markets, in particular Spain where the company already has a significant presence.

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