Intersnack to buy KP Snacks from United Biscuits

LONDON Wed Dec 5, 2012 12:27pm EST

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LONDON (Reuters) - German group Intersnack is to buy KP Snacks, Britain's second-largest savory snacks maker, in a deal that could pave the way for the sale of the rest of United Biscuits by its private equity owners.

While no financial detail was disclosed, two people familiar with the situation said on Wednesday the deal for the maker of Hula Hoops and KP Nuts was worth more than 500 million pounds ($805 million).

Private equity firms Blackstone (BX.N) and PAI put United Biscuits' savory snacks arm up for sale earlier this year, attracting rival private equity firms and food industry rivals.

The deal showed how private equity houses are breaking up their largest companies, bought at the height of the buyout boom, because they cannot find takers for the whole business.

Blackstone and PAI had tried two years ago to sell all of United Biscuits, a business they bought in 2006 for 1.6 billion pounds.

The sale leaves them still in control of the larger biscuits business, which makes McVitie's Hobnobs and Jacob's Cream Crackers and has 30 percent of the British market.

The owners are hoping the sale will mean the biscuits arm, which has 180 million pounds earnings before interest, tax, depreciation and amortization (EBITDA), will attract buyers not interested in salted and savory snacks, one of the people said.

International operators, incluukpding Chinese group Bright Food SHMNGA.UL and U.S. companies Campbell Soup (CPB.N) and Kellogg's (K.N), had shown interest in the whole group in 2010 when the private equity firms investigated a sale and could be tempted again.

However, a sale of the biscuits business is unlikely to launch before the end of 2013 at the earliest, the person said.

Other private equity houses are following a similar route with some of their largest companies, hoping that splitting them up will lead to more profitable exits.

KKR (KKR.N) and Permira PERM.UL are carving up German broadcaster ProSiebenSat.1 PSMG_p.DE to make it more attractive and digestible for potential buyers.

The price paid for KP Snacks equates to nine times its 2011 EBITDA of 56 million pounds. The business, which also sells the McCoy's and Nik Naks brands, has annual sales of 280 million pounds and employs about 1,500 people.

Privately-owned Intersnack, whose brands include Pom-Bear potato snacks and Penn State pretzels has turnover of about 100 million euros ($131 million) in Britain, said the deal would allow it to grow further and strengthen its position.

Intersnack, which has operations across Europe, is aiming for sales of 1.7 billion euros in 2012.

The KP Snacks deal, which is expected to close in the first quarter of 2013, will be financed with Intersnack's shareholder equity and a syndicated loan underwritten by Commerzbank, HSBC Trinkaus & Burkhardt, HSBC and UniCredit.

($1 = 0.6209 pound = 0.7642 euro)

(Additional reporting by Alexander Huebner in Frankfurt.; Editing by Elaine Hardcastle and Dan Lalor)

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