China's Hony Capital mulls bid for United Biscuits

 

McVities, Penguin and Jaffa Cakes could be the latest British brands to fall under Chinese ownership as private equity firm Hony Capital weighs up a bid.

If Hony, owned by the giant investment company behind Lenovo computers, pitches in with an offer, it would be the second Chinese takeover bid for United Biscuits in four years. In 2010, China’s Bright Food Group tried and failed in its takeover plans.

United Biscuits is currently owned by private equity firms Blackstone and PAI, who bought it for £1.6bn in 2006. The most recent accounts for United Biscuits Topco show that it made operating profits of £130.8 million in 2012 against £134.6 million the previous year on flat revenues of £1.05 billion. However, after paying £95.1m to service its £1bn debts, it made a profit on continuing operations of £45.7 million.

The accounts described it as having endured “continued difficult market conditions.”

Total staff numbers were just under 8,000 at the company whose brands are sold in more than 100 countries.

The current owners are working with banks including JPMorgan Chase & Co. as they consider their options, one person familiar with the situation said.

United Biscuits’ owners sold the KP snacks unit last year for more than £400 million, people familiar with the deal said at the time.

Following the sale that year of its KP Snacks division, chief executive Benoit Testard was replaced by former Birds Eye boss Martin Glenn

While based in the UK, accounts show its ultimate parent company is in a shared office in Luxembourg. UB Topco paid UK corporation tax of just £100,000 in the 2012 year.

The company declined to comment on reports of the takeover interest, first reported by Bloomberg.

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