LONDON, Oct 1 (Reuters) - Bankers are working on debt financings of up to 1.5 billion pounds (2.43 billion US dollar) to back Jammie Dodgers and Wagon Wheels maker Burton’s Biscuits’ bid for UK-based cookies and snacks maker United Biscuits (IPO-UNI.L), banking sources said.
Burton‘s, which was bought by Ontario Teachers’ Pension Plan last year, is one of three firms through to the second and final round of bidding, along with breakfast cereal maker Kellogg Co and Turkish biscuit company Ulker Biskuvi Sanayi and bids are due by October 31, the banking sources said.
Private equity firms Blackstone and PAI Partners bought United Biscuits -- the firm behind brands such as McVitie‘s, Jaffa Cakes and Twiglets -- in 2006 for 1.6 billion pounds, backed with 1.4 billion pounds of leveraged loans, according to Thomson Reuters LPC data.
The owners hired Goldman Sachs and JP Morgan to consider options for the business including a sale, which could fetch a price tag of 2 billion pounds or an initial public offering, the banking sources said.
Bankers are working on debt financings of around 5.5 to 6.5 times the combined earnings before interest, taxes, depreciation and amortisation (EBITDA) of Burton’s and United Biscuits of approximately 205 million pounds, the banking sources said.
Debt is expected to be in the form of senior leveraged loans and could also include junior leveraged loans, both denominated in sterling and euros, the banking sources said.
The financing would refinance existing debt in both United Biscuits and Burton’s enabling existing investors in both credits to remain invested in the new combined company. Burton’s 2013 acquisition was backed with around 240 million pounds of leveraged loans, TRLPC data shows.
Banks have also been appointed in case United Biscuits’ owners opt to list the company. Goldman Sachs and JP Morgan will be global co-ordinators on the deal and Nomura has been appointed as bookrunner with Investec and Canaccord Genuity as co-lead managers, the banking sources said.
Blackstone, Burton‘s, PAI Partners, Ontario Teachers’ Pension Plan and United Biscuits declined to comment. Kellogg and Ulker Biskuvi Sanayi were not immediately available to comment. (1 US dollar = 0.6170 British pound) (Editing by Christopher Mangham)