The rumour mill over the potential sale of United Biscuits’ salty snacks division may well start up again this week following the appointment of Kraft Foods’ Nick Bunker as CEO of the unit.
Bunker, the head of Kraft Foods’ businesses in the UK and Ireland, is set to become the CEO of United Biscuits’ recently-separated snacks unit from 1 September.
He will join at a time, when, according to reports, the auction of KP Snacks is set to start. Last month, it was reported United Biscuits’ salty snacks and biscuits businesses had been split in two and bankers appointed by private-equity owners, Blackstone and PAI Partners, would start the sale process for the salty snacks division after the summer.
The significance of Bunker’s appointment has not been lost on some industry observers.
Trefor Griffith, director of corporate finance for Grant Thornton, said Bunker’s move to KP Snacks makes it more likely the company will be sold.
“There is now a clear division and that gives them more potential buyers, more potential suitors and Nick is a very very credible operator with a good CV,” Griffith said. “It will definitely help if the best value for the group is to sell the business separately.”
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Signs that United Biscuits could be split in two emerged in March when the company told just-food it was creating two business units within its UK structure, a move seen as a potential pre-cursor for the break-up of the company.
Earlier that month, sources had told just-food the move was being considered as a way of “realising more value” for United Biscuits’ owners, which had put United Biscuits up for sale in 2010 but failed to find a buyer.
United Biscuits and its owners have remained tight-lipped over the timescale of a potential sale, with a spokesperson yesterday declining to comment on the recent speculation.
The spokesperson told just-food Bunker had been appointed as a result of the restructuring of the business in April adding: “We acknowledge that the division does increase sale options and under our private equity ownership the business will obviously be sold at some point, either as a whole business or as separate businesses.”
Bunker’s appointment, however, raises the question as to whether the owners expect the process to sell off the salty snacks unit to take sometime given. In the announcement yesterday the company said he was being brought in to “provide the focus to move this business to its next level”.
Just how long that might take is unknown.
“The question would be, is someone going to come up with a pre-emptive offer which is attractive enough to sell or will they wait to run more of an auction process when Nick has his feet under the table and the plans are better formulated? It could be one or the other,” Griffith speculated.
The spokesperson emphasised that Bunker has been appointed to “head up the KP Snacks division and take it to the next level of development”.
“He is not going to leave a leading career with a successful company just to oversee a sale. He’s going to look at increasing the focus on investment and developing the potential of the business in the UK and internationally,” the spokesperson said.
Bunker’s appointment will see him rejoin United Biscuits. He worked for the company’s international division in the 1990s. After a stint at retail and services group Inchcape, he joined Kraft in 2000. He worked for Kraft’s businesses in the UAE, the Czech Republic and Slovakia before moving to head its UK arm in 2008.
Griffith believes the interest of a potential sale may have lured Bunker into taking up the role.
“Kraft aren’t going to sell Cadbury in the short term and in terms of exit activity there is not likely to be much opportunity at Cadbury or Kraft, whereas United Biscuits has said the business will be sold, so from Nick’s point of view, being part of that is going to be very interesting.
“He has a very strong CV and would be an important part of any process that goes on and that would be very interesting I’m sure to him, which is probably why he’s gone,” Griffith said.
While United Biscuit and its owners have remained coy over the prospect of the sale of KP Snacks, the industry has already speculated about which companies could be interested in the business
As to how much interest the business has garnered is, as yet, unknown.
“It is clearly in the public domain that it’s going to be sold and therefore it would be a surprise if people weren’t circling already and having conversations,” Griffiths said.
Suggested potential candidates have included privately-held German company Intersnack and US cereal giant Kellogg.
As for the biscuits business, Griffith holds the belief that consolidation may be key for the sector.
“You could argue that there are too many biscuit businesses at the moment and there needs to be some consolidation there. The question will be who leads that consolidation and whether it’s a trade party or more likely a private equity business doing that.”
The owners are understood to be looking to keep United Biscuits’ biscuit and cake arm, which owns brands like Penguin and Jaffa Cakes, although it remains unclear if, at some stage, that side of the business would also be up for sale.
In any case, whether Blackstone and PAI sell off the biscuits business or not, the current focus for the owners, is likely to remain on the future of KP Snacks.
And so as the private equity firms continue with their preparations to auction off a snacks portfolio that includes Hula Hoops and Mini Cheddars, Bunker may also be preparing to make his mark on what could be a significant M&A deal for his CV.