Private equity firms are hungry. The buying habit seems
to be becoming frenzied, and what do the ads say you should do when you are feeling
peckish? Why they say “p p p pick up a Penguin,” and that’s what Blackstone and PAI
have done.

The two private equity firms are buying up United Biscuits – the company behind
McVities and Hula Hoops, Jacob’s Cream Crackers, Jaffa Cakes, Phileas Fogg, KP Nuts,
and, of course, the Penguin bar.

The company is number two in the European league of biscuit companies, with the
French company Danone holding number one slot.

In all, the deal is worth £1.6 billion, with PAI Partners upping their stake from 40 to
50 percent, and Blackstone taking the rest.

But “what about the pensioners?” say the Unions. “You Private equity firms just
worry about short-term deals.” Strangely, an opposite claim made by many says private
equity scores over stock market listings, because the management can focus on the long-
term and not see the company examined in minute detail by analysts every quarter.

Brian Revell, a spokesmen from the Transport and General Union, said: “Private
equity deals are invariably struck for quick returns for shareholders. But the TG’s
view is that the workforce and their pensions must be taken into account. That’s why we
believe there should be a cash injection to show this is not a quick-fix deal, but a longer
term investment.”

But United Biscuits retaliated with a spokesmen saying: “As part of the agreement
with our new shareholders, a significant lump sum payment will be made to the pension
plan and a commitment to an accelerated programme of contributions to cover the
remaining deficit has been agreed.”

But while the Unions might not be sweet on the deal, United Biscuit’s problem
moving forward is that it is too sweet. These days, the demand is for healthy snacks, and
“choccie” biscuits are not the rage any more. And for Blackstone and PAI, the challenge
must be to come up with healthy biscuits that sell in the kind of numbers its more well
known brands once enjoyed. A biscuit containing the elixir to eternal life, perhaps would
do the trick.

© Investment & Business News 2013