Search on for an Asian partner for Unibic

20-Jun-2011 - Last updated on 15-Mar-2017 at 19:04 GMT

Private equity firm Lazard Australia is in talks with potential strategic partners in Asia to sell a portion of its stake in Australian biscuit maker Unibic Pty Ltd, Unibic’s managing director Michael Quinn told Reuters last week.

Unibic is fighting a very narrow raw material supply situation together with a very competitive retail environment, said Quinn, and so is exploring a number of partnership options, including part ownership.

Quinn further was quoted as saying that both Lazard and Unibic were interested in a Chinese partner, as it would provide them with leverage to combat the supply issues dogging the company.

On being contacted, officials at Lazard were unwilling to disclose any details on the sale including the name of the companies that they were talking to or planned time frame for such a deal to occur.

“Naturally, as financial investors, we will look to exit at some point in time to the most suitable buyer who would add value to the business in the longer term without any regards to the nationality of the buyer,” a spokesperson said.

Unibic is Australia’s third largest biscuit maker behind Arnott's, which is fully owned by US-based Campbell Soup Co, and Goodman Fielder Ltd.

However, according to local media reports, all three companies are facing a squeeze because of increased competition between the two top supermarket chains, Woolworths Ltd. and Wesfarmers Ltd’s Coles Supermarkets.

In the first quarter of this year, the two supermarkets went on an all out offensive, sharply cutting prices and offering consumer-friendly deals on many items, as well as increasing the share of those labels on their racks.

Then the floods in Northern Australia during January this year further pushed up the cost of raw commodities. According to Quinn, the cost of Unibic’s main ingredients, wheat, butter and sugar, has surged 60 per cent over the past three years.

Unibic also has a fully owned subsidiary in India in Unibic India that caters to the Indian market. Marico Ltd., an Indian consumer goods company was aiming to buy 51 per cent of that business, but talks ended in May.

According to the Lazard spokesperson, the Indian market is growing strongly and the company has delivered compound annual growth at double the market rate over the last four years.

“There has been significant investment in the platform with new facilities operating to western standards and the company has been successful in establishing a strong position in particular with the modern retailers,” he said.

“Given the attractiveness of the Unibic India business and the sensational taste of its products including its new sugar free health range, we are not surprised that we have received some trade interest in this investment,” he added.