Snackhouse faces crisp sell-off

Institutional investors are understood to have decided it is crunch time for Snackhouse, the nibbles and crisps maker whose managing director resigned last month.

The two largest investors, Knox D'Arcy and BancBoston, are understood to be pressing for the business, which until recently was known as Benson's Crisps, to be put up for sale. A price tag of 40p a share – or about £18m – has been mentioned.

Snackhouse issued a profits warning in May, saying that sales of its own-label crisps had fallen by 7 per cent. This had led to a fall in profits and difficulties in securing the "desired level of promotional activity".

The net effect of this will be that the group is expected to report a significant loss for the first half of the year when it reports results next week.

This was the second profits warning in seven months and led to the resignation of Snackhouse's managing director, Neil Hopkins-Coman.

He has been replaced by Dennis Heywood, who is understood to be under pressure from investors to mount a management buy-out of the company.

Sid Taylor, Snackhouse's chairman, has promised a turn around in the company's fortunes later this year. However, the group is a minnow in a market dominated by global groups, such as Pepsico which owns Walker's Crisps.

Industry experts believe that Snackhouse could fall prey to one of the private equity firms, such as Hicks Muse, which have been building up portfolios of food companies in the hope of creating a business large enough to return to the stock market.

Much larger food manufacturers – such as Hillsdown and Rank Hovis MacDougall – have fallen prey to private equity buyers in the last couple of years as the stock market turns its back on the sector.