The other two main runners and riders so far are Ontario Teachers’ Pension Plan, which took over Burton’s Biscuit Company in November last year, and Turkish food producer Ulker Biskuvi Sanayi.
Private finance groups have shown little interest so far in the first round bidding process. This could be because some may believe UB’s current private equity owners Blackstone and PAI Partners may have realised most of the straightforward potential of the business.
Robert Lawson, co-founder of Food Strategy Associates, former UB strategy director and former global director strategy, snacking at Kraft International believes Kellogg is in a strong position at this stage.
‘Financial muscle’
“Kellogg has the financial muscle and synergies to outbid anyone else in the process, but that doesn’t mean it will – it may have other priorities,” Lawson told FoodManufacture.co.uk.
Other firms have been mentioned as interested parties, but they are not, as yet, believed to have lodged firm bids. They include diverse Philippino conglomerate San Miguel, which has a large food subsidiary, the Saudi Arabian Savola Group and Italy’s Ferrero.
Some of the names mentioned may face significant competition concerns should they try to bid for UB in its entirety, complicating a potential deal. For example, Ontario Teachers’ Pension Plan’s interests in Burton’s would present difficulties in that area.
Too powerful
Mondelēz, whose name has not surfaced so far, would have considerable synergies with UB, but may also be viewed as too powerful a biscuit player by authorities if it struck a deal.
However, Lawson said companies did not have to launch bids for the whole of UB, which makes brands such as McVitie’s and Jaffa Cakes. “There are bidders, such as Mondelēz or Ulker, who might be more interested in parts rather than the whole and I wouldn’t rule out parties teaming up for joint bids.”
A UB acquisition is not the only option to boost investment in the business. The firm appointed financial advisors Goldman Sachs and JP Morgan to consider all avenues, including a stock market flotation of its shares.