Kraft prepares for UB bid

By Anita Awbi

- Last updated on GMT

Related tags Premier foods Kraft foods Nabisco

American manufacturer Kraft will make a bid for United Biscuit's
southern European division, while Premier Foods and a Dutch equity
firm negotiate for stakes in UB's northern European operations.

According to reports in the British press, Kraft Foods will offer around £570m for UB's southern Europe business, which takes in seven of the top 10 selling biscuit brands in Spain. The division currently holds a 39 per cent share of the Portugese biscuit market through the Truinfo brand, and has a presence in Italy.

Kraft, maker of Dairy Lea cheese and Ritz crackers, currently holds a 25 per cent share in UB, but is now looking to take full control of regional operations that already manufactures Kraft's flagship Oreo brand under licence.

Premier Foods is also thought be assessing its options, expressing interest in UB's top-selling British brands Jaffa Cakes and McVitie's.

Goldman Sachs is overseeing the process, and said the first round of bids is expected next week.

In April UB, currently Britain's leading biscuit manufacturer, announced a year-end profit jump to £204m - up from 2004's £163m. This was bolstered by contributions from newly-acquired snack brands Jacobs and Truinfo. It has also recently purchased Nik Naks and Wheat Crunchies from bankrupt Golden Wonder.

Meanwhile Premier Foods has had a strategic year, acquiring Bird's desserts from Kraft, Quorn meat-free range from Marlow Foods, Gedney's fresh vegetable supplier and Cauldron's vegetarian range.

Overall, Premier Foods reported an annual group turnover of £789.7m, up six per cent from 2004's £744.7m - making it Britain's fourth largest food producer.

However the going has been tougher for global player Kraft. In February the firm announced a massive extension to its existing three-year restructuring plan, to get rid of 8,000 jobs and 20 production plants.

The manufacturer said the restructuring drive will be led by a "fewer, bigger, better"​ policy, concentrating on crucial brands in key areas as the firm suffers from lagging performance.

It was announced yesterday that CEO Roger Deromedi will be replaced by former PepsiCo chief Irene Rosenfeld, as the company struggles to revive profits.

But future success rests on whether Kraft can effectively refocus its portfolio and successfully build presence in key market areas, fuelling rumours that parent company Altria will spin off the firm.

Related topics Business Kraft Foods

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