United set to lose Spanish biscuit chase

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The Independent Online
UNITED Biscuits, the McVities biscuits and KP nuts company, is likely to lose the chase for Royal Brands, the Spanish food company that has been up for sale since January.

It is thought that RJR Nabisco, the US food giant, has beaten UB to Royal. Confirmation of the pounds 200m- plus deal is expected this week.

Royal, owned by Tabacalera, has a broad spread of food businesses including biscuits, cake baking and olive oil canning. UB wants only the biscuits part, accounting for about two-fifths of the business, and it approached Tabacalera in concert with another company interested in the other operations. UB is keen on Royal because large biscuit makers rarely come up for sale. It was prepared to pay pounds 60m to pounds 70m - a price that matches Royal's annual turnover.

Tabacalera hoped to orchestrate an auction between UB and Nabisco to force up the price. However, it looks as if UB has stuck to its intention, declared at the time of the publication of its annual results in March, of not overpaying for Royal.

Nabisco sold Royal Brands to Tabacalera in 1989 as part of a debt- reduction programme following the dollars 25bn leveraged buyout by RJR.

Nabisco's first approach to Royal is thought to have been an offer to buy a 50 per cent stake, but it may have been obliged to buy 100 per cent.

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