United Biscuits to put salty snacks division up for sale

The owners of British food company United Biscuits are expected to initiate the bidding process for the sale of its salty snacks division by September 2012.

US food company Kellogg, German snack company Intersnack as well as several other food companies and private equity firms are likely to bid for the unit, which is valued at around £500m.

Swiss financial services company Credit Suisse will run the sale, and the auction process is likely to involve two rounds of bidding, reported Financial Times, citing people familiar with the matter.

However, the owners US private equity group Blackgroup and French buyout firm PAI Partners are yet to hold negotiations with potential bidders over the sale, they said.

The move to sell the United Biscuits’ salty snacks division comes after Blackstone and PAI Partners failed to sell the combined company for nearly £2bn in 2010.

In July 2010, Blackstone and PAI appointed JPMorgan and Goldman Sachs to sell United Biscuits, attracting companies such as Kellogg’s, Kraft Foods, Campbell Soup and China’s Bright Foods.

Bright Foods even entered into exclusive talks over the acquisition that valued United Biscuits at £2.5bn, including debt. The deal, however, fell through when the Chinese company turned its interest towards US nutritional supplement retailer GNC Holdings.

United Biscuits’ snack business includes about 12 brands such as McCoy’s potato chips, Hula Hoops, Mini Cheddars and KP Nuts, while the biscuits unit sells products including biscuits and cakes, representing nearly two-thirds of the company’s sales.

The British food company, bought by Blackstone and PAI for £1.6bn in 2006, has 11 facilities in the UK and posted revenues of £1.3bn, with a net debt of £1.14bn in 2010. It was formed in 1948 after the merger of the two Scottish firms McVitie & Price and MacFarlane Lang.