Financial News

  • 7 August 2014, 12:05

Kellogg Crunches Numbers On 2bn Penguin Deal

The American food giant Kellogg is examining a 2bn offer for the owner of McVitie's, Penguin and other famous British biscuit brands.

Sky News has learnt that Kellogg has appointed investment bankers at Barclays to assess an offer for United Biscuits (UB) that could presage another trans-Atlantic takeover of a prominent UK-based company.

Kellogg is already a major player in the US through its ownership of The Keebler Company, which it bought in 2001 but which for more than 20 years had been owned by UB.

Blackstone and PAI Partners, the private equity groups, have hired Goldman Sachs and JP Morgan to prepare a sale or stock market flotation of UB, whose other leading brands include Jaffa Cakes, Mini Cheddars and Twiglets.

A public listing is viewed as the likeliest option, although a final decision will depend upon the state of stock markets later in the year and the value of any formal offers received from bidders.

Bright Food, the Chinese majority-owner of Weetabix, and Turkey's Ulker are also expected to form part of a sale process.

Sky News understands that UB's board has engaged Centerview Partners, a leading independent advisory firm, to steer it through the process.

Martin Glenn, the former Pepsico and Iglo Birds Eye executive who was appointed to run UB last year, has begun meeting analysts and prospective institutional investors, from whom feedback is said to have been positive.

Mr Glenn has a strong reputation in the consumer goods industry and has focused in recent months on revitalising the core McVitie's brand with new advertising and products.

"He would make an ideal public company chief executive," a competitor said.

In 2012, Kellogg was linked to a possible bid for UB's snacks arm, which included Skips and Hula Hoops, but a formal offer failed to materialise before it was sold to Germany's Intersnack.

If UB does get sold, it would be the second industry deal in less than a year involving North American and British companies.

Last year, the Ontario Teachers Pension Plan bought Burton's Biscuits, the owner of Jammie Dodgers and Wagon Wheels, in a deal worth 350m.

Since then, Burton's has been in talks about a merger with Fox's, another major UK-based producer.

Kellogg said on Wednesday that it did not comment on rumour or speculation.

Last week, Michigan-based Kellogg announced second-quarter profit of $295m, broadly in line with Wall Street expectations.

A UB spokesman and Barclays also declined to comment.

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