Dive Brief:
- Kellogg Co.'s CEO will head to London to discuss a purchase of United Biscuits in a deal worth an estimated $3.2 billion, according to the Wall Street Journal.
- The deal is not set in stone. United Biscuits is said to be pursuing a "dual-track" to maximize the cash it can raise. Under a dual track a company makes plans for a possible initial public offering while simultaneously preparing to sell the company.
- Rival Burton's Biscuits and Turkish biscuit company Ulker Biskuvi Sanayi are also said to have moved to the final stage of bids for United Biscuits.
Dive Insight:
A Kellogg's purchase of United Biscuits would make sense on lots of levels.
First there's the "synergies." Kellogg, which makes Pop Tarts, already has experience in manufacturing little cake-like snacks like United Biscuits' Jaffa Cake.
Second, Kellogg is likely impressed with how well rival Nabisco has done with BelVita biscuits, and wonders if it could do the same with United Biscuits' McVities Digestive biscuits.
And third, as we've noted before, little snacks are one of the global food industry's growth areas and do well in largely untapped markets like the Middle East.