By Jessica Hodgson
LONDON--United Biscuits has fired the starting gun on the sale
of its salty snacks business, a person familiar with the matter
said Wednesday, as the U.K. food group tries for the second time in
two years to sell itself.
The Hayes, England-based maker of Hula Hoops and Twiglets, owned
by private equity groups Blackstone Group (BX) and PAI Partners,
has sent sale memoranda out to a number of potential buyers, the
person said. Although the person didn't identify the recipients,
they are likely to include many European consumer-focused private
equity groups, U.S. food groups including Kellogg Co. (K) and Kraft
Foods Inc. (KFT) and possibly some Chinese food groups. Credit
Suisse (CS) is running the sale.
However, although the sale memoranda are expected to be widely
distributed, bankers and private equity sources say interest in the
asset from buyout specialists currently appears muted.
Blackstone, PAI, United Biscuits didn't respond to requests for
comment. Credit Suisse didn't respond to a request for comment.
The valuation United Biscuits seeks for the unit is unclear.
United Biscuits overall posted earnings before interest, taxes,
depreciation and amortization of GBP230.8 million ($360.9 million)
on revenue of GBP1.3 billion for 2010, according to its last
reported annual earnings. Press reports suggest the snacks business
is worth around GBP500 million.
Credit Suisse earlier this year completed a process of splitting
United Biscuits into two parts, the salty snacks business and a
larger rump business that houses brands including Jaffa Cakes and
Jacob's biscuits, a prelude to the salty snacks sale. Its unclear
what United Biscuits plans to do with the rump biscuits
business.
Splitting the group was a reaction to an earlier, failed sale
process run by Goldman Sachs Group Inc. (GS) and JPMorgan Chase
& Co. (JPM) almost two years ago.
European food groups are increasingly seeking to reach out to
China's fast-growing corporations who in turn are looking to
diversify beyond mainland China where economic growth is slowing
and costs are rising. A number of Chinese firms have bought or
looked at buying food and consumer goods companies in Europe in
recent years.
Press attention has focused in particular on food and beverage
giant Hangzou Wahaha Group, owned by China's richest man, Zong
Qinghou, as a potential suitor for United Biscuits. Kelly Zong,
head of international business at Wahaha and the daughter of Zong
Qinghou, said in a recent interview the company is working with
investment banks to identify international opportunities.
One U.K.-based banking source said Wahaha had been "front-run"
-- or given an early opportunity to look at United Biscuits before
the formal sale process begun, in an indication of the increasingly
important role Chinese groups are seen playing in European
M&A.
A spokesman for Wahaha declined to comment.
Wahaha is following the lead set by Bright Food Group Co., which
acquired a majority stake in U.K. cereal maker Weetabix in May.
Bright Food, which makes China's White Rabbit candy, had previously
looked at a number of western food and consumer goods businesses --
including United Biscuits during the previous auction.
Last year, Bright Food lost out to General Mills Inc. (GIS) in a
bid for a 50% stake in French yogurt, and also looked at U.S.
vitamin maker GNC.
The salty snacks market in China is forecast by Mintel to grow
at about 9% on a compound annual growth basis over the next five
years. But Mintel notes that the market is highly fragmented,
making it difficult for brands to stand out.
-Write to jessica.hodgson@dowjones.com
(Marietta Cauchi in London and Laurie Burkitt in Beijing
contributed to this article)
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