United Biscuits to sell US snacks arm

Click to follow
The Independent Online
United Biscuits, the KP snacks and McVitie's biscuits group under threat of takeover, has put its US salty snacks business up for sale. The division, part of UB's troubled Keebler subsidiary, made a loss last year on sales that declined 23 per cent to $192m.

City analysts believe that United Biscuits would be fortunate to raise pounds 50m from the sale. As one commented: "Sales have been in decline for years. It has never made money. UB would be lucky to give it away."

The snacks division, which includes brands such as O'Boisies, Ripplin's and Tato Wilds!, has been trounced in the US by Pepsico, whose snacks subsidiary, Frito-Lay, accounts for 45 per cent of the market.

Keebler's salty snacks business has a share of 3 per cent and employs 550 in three US states. Some analysts feel the business will be broken up and sold in three different parts.

One of UB's rivals, Borden, had been trying to sell its snacks business in the US for some time but took it from the market after failing to find a buyer.

United Biscuits denied that the whole Keebler business might be put under the hammer. The business has been a problem area for UB since costs were allowed to escalate in the 1980s. Since then the company has resctructured the group and pared an expensive distribution network.

Last year profits rose 5 per cent to $66.8m on sales down 3 per cent at $1.67bn.

The presence of Keebler in United Biscuits' portfolio is seen by many as the poison pill that would put off most predators from making a tilt at the company.

UB has appointed Morgan Stanley to handle the sale. Eric Nicoli, chairman, said the Keebler snacks business had become more efficient. However it is seen as a drain on management resources.

The company is to place more emphasis on Keebler's biscuit division. United Biscuits shares rose 5p to 337p.

Comments