US firm eats our Wagon Wheels

Click to follow
The Independent Online

The US venture capitalist Hicks, Muse, Tate, Furst is understood to have won the race to acquire Burton's Biscuits from Associated British Foods.

The US venture capitalist Hicks, Muse, Tate, Furst is understood to have won the race to acquire Burton's Biscuits from Associated British Foods.

Hicks, Muse has topped a £130m bid from rival Duke Street Capital for the division, whose delicacies include Jammy Dodgers and Wagon Wheels. The American group teamed up with Adrian Sharpe, managing director of Burton's, in an auction organised by accountants KPMG. United Biscuits, recently taken private by a consortium of buyers, was also thought to be interested but faced regulatory hurdles. Northern Foods is said to have been interested too.

In the final auction, which is thought to have been completed on Friday night, Hicks, Muse is said to have outbid Duke Street by no more than £3m.

The disposal of Burton's represents a significant milestone in the history of ABF, that remains under the effective control of the Weston family. There have been calls for the food conglomerate, whose remaining products include Allinson bread and Twinings tea, to be broken up, but the family has remained publicly committed to preserving intact its legacy. However, the sale of Burton's will result in a greater focus on its core milling and sugar operations.

Burton's, which makes a little over £10m profit a year, was considered to be a prime target for acquisition because of the substantial capital investment it has received from ABF.

The quoted food production sector is undergoing a period of major consolidation. Much of the pressure on participants to merge with rivals has been exerted by the supermarkets that have succeeded in squeezing the industry's margins. Hicks, Muse has been a prime mover in that consolidation process. It is part of the consortium which acquired United Biscuits, and last year bought Hillsdown Holdings, best known for Typhoo tea and Buxted chickens, for £537m.

On another front, Duke Street is leading the way in the consolidation of the UK's DIY retailing sector. It already owns Focus Do It All and Wickes, and is among the bidders for both Homebase, which is being offfloaded by Sainsbury's, and Great Mills, which has been put on the market by RMC, the building materials group.

Comments