Private equity partners the Blackstone Group and PAI partners have entered into a definitive agreement to acquire United Biscuits for a purchase price in excess of GBP1.6bn (US$3bn).

The transaction will be financed through equal contributions from Blackstone and PAI funds and debt financing. The debt financing necessary for the transaction has been fully committed by Barclays, Goldman Sachs and JP Morgan. The private equity groups said that it is expected that UB’s current management team will participate in the ownership of the ongoing entity.

“We are attracted to United Biscuits’ market position as well as its existing and new product lines,” David Blitzer, senior managing director of Blackstone said. 

UB is a leading European manufacturer of biscuits and snacks, being the largest manufacturer of biscuits in the UK, joint biggest in the Netherlands and second biggest in France and Belgium. The snack maker is also the largest player in the UK nut market and the UK’s second largest cake and bagged snack producer.

Commenting on the acquisition, Malcolm Ritchie, chief executive of UB said: “Blackstone has a successful track record of owning and developing companies such as UB and I believe the company will benefit from their involvement. PAI is one of our existing shareholders and we are delighted that they continue to see the great potential of the business and want to remain as shareholders. We delivered a strong half year result and we continue to see opportunities to further develop our key brands in all sectors.”

UB is currently owned by private equity groups Cinven, which holds a 30% stake, PAI Partners, which has a 30% stake, MidOcean Partners, which owns 15% and US food company Kraft, which currently owns 25% of UB.

Bertrand Meunier, senior partner of PAI said: “We have known United Biscuits for a long time and welcome the opportunity to continue working with its outstanding management team which has led an impressive turnaround. We fully support their strategy to continue to develop market positions through new product developments and selected acquisitions.”
The completion of the transaction is subject to customary conditions, including clearance from the European Commission and UK Pension Regulator. It is expected to close by December 2006.

JP Morgan, Herbert Smith and Simpson Thacher advised Blackstone and PAI on the deal.