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Private Equity Groups Sell United Biscuit to Turkish Yildiz

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November 4, 2014

Private equity companies Blackstone and PAI Partners have sealed a deal with Turkish food group Yildiz for the UK company United Biscuit. Its private equity owners put the company, which is behind Jaffa Cakes and McVitie’s, on sale earlier and now have reportedly closed the deal for £2 billion.

 

United Biscuits is one of Britain’s largest cookie and cracker makers, with a strong market presence also in Netherlands, Belgium, France and Ireland. According to the BBC report, the company employs around 7,100 people. Around 4,600 are employed here in the UK in its factories in London, Manchester, Liverpool, Carlisle and Glasgow.

 

The private equity giants Blackstone and PAI Partners acquired the company in 2006 for nearly £1.6 billion. Lionel Assant, from the European division of Blackstone, said in the press release, “United Biscuits is a great business and has been an excellent investment for us” (The New York Times).

 

Yildiz interest in the biscuit giant doesn’t come as a surprise. It has been active in the food sector in the previous years, making a number of big acquisitions. In 2007, it bought the premium chocolate maker Godiva for over £530 million. Last year, it acquired a US candy and snack company DeMet’s Candy Company for nearly £140 million.

 

In addition, United Biscuits has also been active on the merger and acquisition front. It bought a stake in A&P Foods, a Nigerian biscuit maker, as well as acquired assets from Rana Confectionary Products just last year.

 

Reuters quoted Yildiz’s statement which said, “In the past six years, adding premium chocolate maker Godiva and established U.S. candy maker DeMet’s to its portfolio, Yildiz Holding took its largest step towards globalisation with acquiring United Biscuit.”

 

Mr. Ulker, Yildiz’s chairman, told the Financial Times that, “We want to grow United Biscuits to be a global player as part of Yildiz. This will include enhancing its position in the UK, where Yildiz currently has minimal presence, so we will continue to invest in the UK and Europe”. The company also stated its interest in exploring the opportunities in emerging markets in Africa and Asia.

 

Currently the company has no presence in the UK, so the deal helps the company to gain entry. Its focus has previously been in the US, the Middle East, China and Japan.

 

It is believed that Yildiz beat many other companies for United Biscuit. Various reports believed the breakfast cereal maker Kellogg Co was also interested in United Biscuit. The private equity companies have been looking to sell United Biscuit for a few years now, with the previous attempt with Chinese-based Bright Group falling due to Bright Group’s failure to deliver on its indicative price.

 

The deal is expected to be near £2 billion, although final details of the deal weren’t disclosed at the time of writing.

 

The deal is yet another proof of the negative market conditions for public listings. The Grocer pointed out that the private equity companies Blackstone and PAI Partners were initially hoping to list United Biscuits, but decided to sell after the equity conditions worsened during the summer.

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