The group has spent pounds 240m in the past two months buying a snacks business in Australia and a biscuit manufacturer in the US, and the City is concerned about its ability to digest another deal. The pounds 193m purchase of the Coca-Cola Amatil snack business was partly funded by an pounds 80m share placing, but the group's debts are about 88 per cent of its net assets, excluding the value of brands.
Royal Brands, which has 20 per cent of the Spanish biscuit market, has been put up for sale by its parent, Tabacalera, Spain's largest tobacco company. It has had a 17bn pesetas ( pounds 98m) offer for half the shares from Nabisco, the US foods group, but United Biscuits has also asked for details. Nabisco owned half the business until 1991, when it was sold to Tabacalera following the leveraged buyout of Nabisco by RJR.
United Biscuits is due to begin a sales joint venture with Royal Brands at the beginning of February, which would almost double its share of the Spanish market to 6 per cent. It said it was too early to say whether it would consider making an offer for the business, but Brian Chadbourne, McVitie's managing director, said: 'It is one of the best, if not the best, biscuit businesses in Spain.'
Royal Brands also has interests in other food products, such as pudding mixes, and biscuits account for just over a third of its Ptas25bn turnover. United Biscuits is unlikely to be interested in the other food businesses but Mr Chadbourne would not comment on whether it would be prepared to buy the whole company, selling on the bits it did not want.
In the past two years UB has acquired biscuit companies in France, the Netherlands and Denmark.Reuse content