United Biscuits' units may split in sale by Blackstone, PAI

The snacks and biscuits division of UK manufacturer United Biscuits could be parcelled out to different buyers, according to a research firm's analysis of the market following media reports the company is to be sold by its private equity owners.

The Blackstone Group and PAI Partners bought the manufacturer for £1.6bn in 2006 and are said to be sounding out investment firms for advice regarding an auction in the autumn of the Jaffa Cakes maker.

United Biscuits (UB) saw good performance last year with revenues of £1.26bn but had a tougher time of it in 2010 with aggressive targets set by its owners.

Industry analysts are currently placing bets against whether UB will fall into the hands of another private equity firm or a branded food manufacturer, according to Chris Brockman, market intelligence manager at Leatherhead Food Research.

Another option, according to market insiders, would be to break up UB and to sell off its biscuit and snack divisions separately.

“It would be feasible to split the biscuits business which is quite international (McVities plus the European biscuit brands such as Delacre, BN, Verkade) from the more UK orientated snack business (McCoys, KP, Hula Hoops),” argues Brockman.

The analyst notes though that the leader in the snacks business in the UK is PepsiCo and given its high share of the market “there would probably be competition issues in combining it with UB’s snacks business.”

Brockman maintains that a European player with less exposure in the UK could be an option for the snacks segment.

Some of the mayor savoury snack companies in continental Europe include Intersnack and Lorenz Snack-World. Behind Kraft, UB and Nestle, the next big players in biscuits are the likes of Bahlsen, Campbell’s and Kellogg’s.