The breakfast cereal maker is in the early stages of exploring a bid for the company, the person said, and has not decided if it will move forward with an offer.
Kellogg and UK-based United Biscuits are not currently in negotiations, the person said.
Sky News reported earlier on Wednesday that Kellogg was working with investment bankers from Barclays on a possible 2 billion pound ($3.4 billion) bid for United Biscuits.
United Biscuits’ private equity owners, Blackstone Group LP (BX.N) and PAI Partners, have been working on plans for a sale or an IPO that would take place by year-end, the source said.
The source said the owners would opt for a sale over an IPO if the offer were at a “very good price” above 2 billion pounds.
Kellogg, best known for its corn flakes cereal, is the latest company to be linked to an offer for United Biscuits.
Chinese private equity firm Hony Capital was said to be considering a bid for the British company in January.
Industry insiders have said that Kellogg could be a possible suitor for United Biscuits because of its large presence in the snack aisle with Keebler cookies, Pop Tarts and Cheez-It crackers.
Sales in Kellogg’s U.S. cereal business have fallen for five quarters in a row as other breakfast options such as yogurt and frozen egg sandwiches grow in popularity.
Kellogg said it does not comment on rumors or speculation.
United Biscuits did not immediately respond to an email seeking comment. A Barclays spokesman declined to comment.
Kellogg shares ended at $62.78 in regular trading, down 2.5 percent.
Reporting by Ramkumar Iyer and Esha Vaish in Bangalore, and Sophie Sassard and Pamela Barbaglia in London; Editing by Steve Orlofsky