Blackstone to bid in £1.7bn United Biscuits auction

The US private equity firm is reported to be lining up a bid for United Biscuits, the maker of McVities Biscuits and Jaffa Cakes in the UK. The move will pit the firm against Premier Foods, a UK food group.

Blackstone, a US private equity firm, is expected to make an offer for the Northern European business of United Biscuits this Thursday in the final round of the auction for the maker of McVities Biscuits and Jaffa Cakes in the UK.
 
Premier Foods, owner of food brands Ambrosia custard and Branston pickle, has partnered with NPM Capital, a Dutch private equity firm, according to a report in the Financial Times.
 
Lion Capital, a UK private equity firm focused on the consumer sector, is understood to be in discussions with Premier Foods, a former portfolio company, but may not be involved in the £1.7 billion (€2.5 billion) auction. Permira and Kohlberg Kravis Roberts have already pulled out of running.
 
If Lion Capital does partner with Premier Foods, it is expected to merge the KP Snacks business of United Biscuits with Kettle Foods, a snacks and healthy foods manufacturer acquired last month in a deal valuing the business at between $280 million and $320 million.
 
Blackstone and Lion Capital partnered in November 2005 for the €1.85 billion acquisition of the European soft drinks division of Cadbury Schweppes. Blackstone was not immediately available for comment. Lion Capital declined to comment.
 
Private equity firms Cinven, PAI Partners and MidOcean Partners appointed Goldman Sachs in February to carry out a strategic review of United Biscuits. Cinven and PAI Partners each own 30 percent of United Biscuits, MidOcean Partners 15 percent and Nabisco (now part of Kraft Foods, a US food group) the balance. The firms acquired United Biscuits in a €2.9 billion public-to-private in April 2000.
 
In May of this year, Kraft Foods partnered with Premier Foods and NPM Capital to buy the whole of United Biscuits before the deal broke down over a failure to agree terms. In July, Kraft Foods paid £575 million for United Biscuits’ southern European business, the largest manufacturer of biscuits in Spain and Portugal.
 
Robert Schofield, Premier Foods’ chief executive, was managing director for United Biscuits UK, overseeing both the McVities and KP Foods businesses. Lion Capital appointed him to run Premier in 2001.
 
Premier Foods was built through acquisitions by Lion Capital in its former guise as Hicks Muse Europe. Acquisitions under Lion Capital’s ownership included Typhoo Tea, Cadbury’s Hot Chocolate and Bird’s Custard and the business was floated on the London Stock Exchange in July 2004. In October of the same year, Lion Capital sold its remaining 20 percent stake.