San Miguel to join bidding for big UK biscuits group

MANILA, Philippines–Conglomerate San Miguel Corp. (SMC) is considering to expand into British snacks manufacturing by bidding for United Biscuits, seen as a potential big “reinvestment” into the traditional branded consumer staples business.

SMC president Ramon S. Ang on Wednesday confirmed reports by the UK-based SkyNews that the Filipino conglomerate was keen on joining the £2-billion (P140.64-billion) auction of United Biscuits (UB), owner of some of Britain’s biggest food brands.

Another SMC source added that the conglomerate had long been looking at UB upon the invitation of the British food firm’s representatives, who had made several trips to the Philippines in the past. The source added that it was possible that SMC, which recently entered into an agreement to sell its 49-percent stake in flag carrier Philippine Airlines back to the Lucio Tan group, could make a bid by itself or with a partner.

Based on a British media report, UB’s key stockholders—private equity firms Blackstone Group and PAI Partners—were working on an equity deal, whether a share sale or a public listing, that could happen this 2014.

The SMC source added that Ang might join President Aquino’s upcoming European trip and possibly meet with UB representatives to work on its bid. “It is a global brand with a very good business,” the source said, explaining SMC’s interest in the British company.

“With the proceeds from the reported PAL sellback, they will certainly have the resources to bid for UB. A successful bid would drive renewed speculations on what San Miguel’s business strategy really is about. They have been diversifying outside their food business in recent years but if successful with UB, this would be considered a ‘reinvestment’ into the branded consumer staples business,” said Jose Mari Lacson, head of research at local stock brokerage Campos Lanuza & Co.

Gokongwei-led URC recently acquired Auckland-based Griffin’s Foods Ltd., New Zealand’s leading biscuit and snack food manufacturer, for about NZ$700 million (P26.37 billion).

“Given URC’s latest NZ acquisition, it is not improbable that a UB investment will enable SMC to offer its biscuits in the domestic and even regional branded consumer markets. But given the wide interest for UB, we think SMC’s chances are as good as the other interested parties. Perhaps URC is also interested,” Lacson said.

A banking source said some other Filipino conglomerates were indeed looking to bid for UB.

Based on the British media report, other foreign parties seen vying for UB were breakfast cereal maker Kellog, Chinese private equity firm Hony Capital, Saudi Arabian food producer Savola Group, Italy’s Ferrero, Turkey’s Ulker and rival UK biscuit maker Burton’s owner Ontario Teachers Pension Plan.