United Biscuits’ salty snacks sale rumours mount

By John Wood

- Last updated on GMT

Related tags: United biscuits

Could Hula Hoops soon have a new owner?
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Speculation about United Biscuits’ (UB’s) plans to sell off its salty snacks business is growing stronger, despite the company dismissing these suggestions.

Last week UB refused to comment on reports that it had completed the separation of its salty snacks and biscuits arms into two distinct units in preparation for a sale.

In March UB’s owners, US private equity group Blackstone and French buy-out firm PAI Partners, were reported to have appointed the investment bank Credit Suisse to split the salty snacks business from the biscuit unit.

That process is now understood to have been completed, and it is expected the salty snacks division will be auctioned after the summer.

Sell the business

The decision to separate the two units follows an attempt to sell the business in its entirety two years ago, which failed.

One city insider said the split made sense because it would be much easier to sell them as two separate units. He explained: ”It would be a more difficult sale as a whole, but there will be more competition for the two units.”

The source predicted there would be “serious players” interested in the sale although some could encounter problems with the competition authorities.

He added: “UB has been a well run company and this is about creating shareholder value for the exit. If the salty snacks unit goes to another company where it is a good fit, the synergies should be able to add value, or it will grow value as a standalone business.”

Brands within the salty snacks division include McCoy’s, KP and Hula Hoops, while McVitie’s and Jaffa Cakes are the two biggest names within the biscuits business.

Performed well

Earlier this year an analyst for market research group Mintel told foodmanufacture.co.uk that UB’s salty snacks division had performed well in a rising market.

She said: “United Biscuits had a successful year in 2011 in terms of the crisps and snacks market, with robust growth in its core crisp brands.”

According to Mintel, the overall salty snacks market in the UK was estimated to be worth £3.18bn in 2011, and grew by 6% compared with the previous year. McCoy’s was the fourth largest salted snack brand in the UK and KP was the largest nuts brand.

KP was the only nut brand to grow last year and increased its market share to 13% (£43M) after new product launches such as jumbo-sized peanuts.

The prospects for salty snacks sales are also good, she said, adding: “The expected continuation of consumer trends for staying in, snacking with others via sharing bags and the desire for affordable treats all mean that growth for salty snacks looks likely to continue in the coming years.”

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