Chinese set to eat up United Biscuits deal

MCVITIES manufacturer, United Biscuits (UB) is in talks with one of China’s largest food groups about a possible takeover that could value the British company at almost £2.5bn.

The Shanghai-based foods group Bright Food yesterday confirmed that it was in talks with UB to pen a deal that would potentially hand the Chinese group a large chunk of the British food industry.

If the two agree a deal, Bright Food will acquire UB, which is also behind brands such as Hula Hoops, McCoys and Twiglets, from private equity owners Blackstone and PAI.

It is understood that Bright Food has turned to Rothschild for financial advice.

UB was put up for sale in July after Blackstone and PAI hired Goldman Sachs and JP Morgan to prepare for an auction of the business. The two bought the food company in 2006 for £1.6bn.

Already a number of bidders have expressed interest in UB, including New Jersey-based Campbell’s.

In August, Campbell’s, which manufactures canned soup and pasta sauces, emerged as a lead bidder for UB. The US company, however, was just interested in UB’s biscuits business and not its snacks operation.

Food giants Kraft, Kellogg’s and PepsiCo were also thought to be interested in UB, as well as India’s Britannia.

UB, which was founded in 1948, last year saw profits rise by 13.4 per cent to £223.4m. It has annual revenues of £1.3bn and net debt of £1.2bn.

Bright Food, meanwhile, last year generated roughly £200m in profits on sales that reached £4.3bn. Its brands include Big White Rabbit candy and Shikumen yellow wine.

Despite the fact it is already foreign owned, a possible deal with Bright Food is likely to spark concern over the future of UB’s British employees and could trigger interest from the interventionist Vince Cable.

FAST FACTS | UNITED BISCUITS
● Profits reached £223.4m last year.

● Sales reached £1.26bn last year.

● Net debt reached £1.2bn last year.

● Manufactures: McVities, Jaffa Cakes, McCoys, Twiglets, Hula Hoops and Phileas Fogg.