Chinese giant Wahaha ‘leads pack’ after KP Snacks

21-Aug-2012 - Last updated on 22-Aug-2012 at 08:22 GMT

Eastern promise? Chinese food giant Wahaha wants to gobble up UB's KP Snacks business

A Chinese food giant has emerged as the leading contender to buy United Biscuit’s (UB’s) KP Snacks business, according to the state-owned China Daily newspaper.

Hangzhou Wahaha Group is China’s largest beverage producer. If successful, it would be the second Chinese company to take over a major Western food brand this year.

In May Bright Food Group, Wahaha’s biggest rival in China, bought a controlling interest in Weetabix.

China Daily quoted Zhang Huiming, head of the Enterprise Research Institute at Fudan University in Shanghai, as saying: “No doubt, Wahaha has its advantages. It is a leader in the food and drink business in China, and has successful experience of retailing in China, the world’s largest market. The Chinese market, with its huge consumption potential, will strongly support Wahaha.”

Credit Suisse

Wahaha is reported to be one of six companies that have received a four-page ‘teaser’ document from investment bank Credit Suisse, which is advising UB’s owners on the disposal of KP Snacks.

Other recipients were Kellogg’s, which recently bought Pringles from Procter & Gamble for £2.7bn, Kraft, where KP Snacks’ new boss formerly worked, and three private equity firms including Permira. A final prospectus on the sale is expected to be sent out on September 3.

In March UB’s owners, US private equity group Blackstone and French buy-out firm PAI Partners, appointed Credit Suisse to split the salty snacks business from the biscuit unit in preparation for a sale.

Nick Bunker

Although UB’s spokeswoman refused to comment on reports of the plan at the time, earlier this month it was confirmed. UB announced that Nick Bunker, who had been running the Kraft and Cadbury business in the UK and Ireland for the past four years, had just been appointed chief executive of the separated KP Snacks business.

The decision to separate the two units followed an attempt to sell the business in its entirety two years ago, which failed.

One City insider said the split made sense because it would be much easier to sell them as two separate units. He explained: “It would be a more difficult sale as a whole, but there will be more competition for the two units.”

The source predicted there would be “serious players” interested in the sale although some could encounter problems with the competition authorities. Competition issues could be a factor in Wahaha’s favour.

Brands within the salty snacks division include McCoy’s, KP and Hula Hoops, while McVitie’s and Jaffa Cakes are the two biggest names within the biscuits business.