Bankers are preparing debt packages to back a buyout of UK-based United Biscuits' salty snack business which is expected to go up for sale in September and fetch around 500 million pounds ($776 million), banking sources said on Friday.
Buyout firms Blackstone Group and PAI Partners bought the company, which makes brands including Hula Hoops and Jaffa Cakes, for 1.6 billion pounds in 2006. They were unsuccessful in selling the company in 2010 for 2 billion pounds, despite attracting interest from China's Bright Foods, Kelloggs, Kraft Foods and Campbell Soup.
Following this, the buyout houses decided to split the food company's salty snack business from its other operations, hiring Credit Suisse earlier this year to conduct the process.
The separation has now happened and Credit Suisse will push on with the sale of the salty snack business which is expected to attract considerable interest from trade and private equity buyers, bankers said.
Blackstone and United Biscuits declined to comment, PAI was not immediately available to comment.
Information on the company was sent out to prospective buyers at the end of July in a bid to get the process moving, bankers added.
Bankers are putting debt packages together in order to back private equity bids for the company.
Financing is expected to be around 300 million pounds or 5 times the salty snacks division's approximate 60 million pounds of earnings before interest, tax, depreciation and amortisation (EBITDA). Financing is likely to include a mixture of senior leveraged loans and mezzanine debt, bankers said.
United Biscuits was founded in 1948 following the merger of two Scottish family businesses - McVitie & Price and MacFarlane Lang. Hula Hoops is one of United Biscuit's best-selling brands, with over 16 billion Hula Hoops eaten in the UK every year.
This article is copyrighted by Reuters
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