Lion Capital drops out of United Biscuits

Private equity firm Lion Capital has left the Premier Foods consortium that is trying to buy United Biscuits, the maker of McVite’s biscuits and KP nuts, for about £1.7bn ($3.2bn). Premier Foods, the maker of Branston pickle and Sun-Pat peanut butter, together with Dutch private equity company, NPM Capital, are still pushing ahead with their binding offer for the whole of United Biscuits regardless of Lion’s decision to drop out of their consortium. They submitted bids on 7 September.

US private equity group Blackstone has also made a competing bid. Goldman Sachs – the bank handling the United Biscuits auction on behalf of its private equity owners MidOcean, PAI Partners and Cinven – is expected to announce the winner imminently.

“Lion dropped out of the consortium about two weeks ago,” an informed source stated. This was confirmed by a further two sources. Lion had been planning to buy KP Nuts, Hula Hoops and McCoy’s crisps. But days before the Premier consortium was to submit its final offer, Lion dropped out, apparently over price. This may have been the reason why Goldman Sachs pushed back the original deadline of 31 August by a week. Goldman Sachs would not comment on the situation.

Robert Schofield, the chief executive of Premier Foods and the former UK managing director of United Biscuits, is thought to have changed his mind about selling off United Biscuits’ snacks business, including KP Nuts, to Lion in the event of a successful takeover. Premier had originally planned just to keep United Biscuits’ iconic UK brands, McVite’s, Penguin and Jaffa Cakes, worth some £600m, according to sources.

“Snacks is making the kind of returns to help support a leveraged buyout,” a market observer said. Lion had probably thought it could buy the snacks business at a reasonable price, the person added. Lion declined to comment.