Burton's And Mondelez In Cadbury Deal Talks

The owner of Jammie Dodgers and Wagon Wheels is close to striking a deal that would remove a potential competition obstacle to a £2bn takeover of United Biscuits (UB), its larger rival.

Sky News has learnt that Burton's Biscuits is in advanced discussions with Mondelez, the US-based food giant, about a sale of the licence it owns to produce Cadbury-branded products in the UK.

Advisers to Burton's believe that offloading the Cadbury business is a prerequisite to enabling the British company to secure a takeover of UB, which owns McVitie's, Hula Hoops and Twiglets.

Talks between Burton's and Mondelez, which was created following Kraft Foods' takeover of the main Cadbury group in 2010, are already said to have resulted in an outline agreement between the two companies.

Burton's has a licence to produce a range of Cadbury-branded products, including Fingers, which it says it sells more than 1 billion of annually.

Its discussions with Mondelez would, however, be academic if UB is either sold to another buyer or proceeds with a £2bn stock market flotation instead.

Last week, Sky News reported that UB had appointed three banks to work on a potential listing even as parallel talks continue about an outright sale.

Burton's was itself sold last year to the Ontario Teachers' Pension Plan, a vast Canadian pension fund, and has since been on the prowl for acquisitions, having also examined a bid for Fox's, a smaller competitor.

UB is in talks with other bidders, the most advanced of which is understood to be Kellogg, with Ulker, a Turkish company, and the Italian confectioner Ferrero also interested.

Goldman Sachs and JP Morgan are advising Blackstone and PAI Partners, UB's owners, on the process, and would take the most senior bank roles if the company opts to go public.

The biscuit-maker's board has engaged Centerview Partners, a leading independent advisory firm, to steer it through the process.

The shareholders will decide whether to sell or float UB in the next few weeks, with the outcome dependent upon the state of stock markets as well as the value of formal offers received from bidders.

Martin Glenn, the former Pepsico and Iglo Birds Eye executive who was appointed to run UB last year, has been meeting analysts and prospective institutional investors, from whom feedback has been positive.

Insiders said that UB plans to change its name to McVitie's ahead of a sale or float because of the widespread recognition of the biscuit brand.

Burton's and UB, which also owns brands such as Mini Cheddars, declined to comment on Thursday.