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Last Updated: Monday, 10 July 2006, 18:31 GMT 19:31 UK
Kraft buys UB business for 575m
Penguin biscuits
European consumers have a taste for biscuits
US food giant Kraft is taking a billion-dollar bite out of Britain's United Biscuits (UB).

Kraft, best known for Ritz crackers and Philadelphia cheese, will buy the Spanish and Portuguese operations of UB for 575m ($1.06bn; 831m euros).

The US firm said it wanted access to a fast-expanding market - UB produces 26% of the biscuits eaten in Spain and 37% of those eaten in Portugal.

UB said its UK arm, with brands such as Jaffa Cakes, would not be affected.

There had been speculation that Monday's sale by UB would lead to the company also off-loading its northern European operations.

UB, whose UK brands include Jaffa Cakes, Penguin biscuits and Mini Cheddar snacks, denied this.

"It's business as usual," said UB spokeswoman Sofia Rehman.

However, she added that that shareholders were considering a number of "strategic options".

Big names

As part of the deal, Kraft said it was also retaking control of products UB had made under license since 2000.

Following the acquisition, Kraft will control the rights for all Nabisco trademarks, including Ritz crackers and Oreo biscuits, throughout the European Union, Eastern Europe, the Middle East and Africa.

Its local Spanish and Portuguese products will include Fontaneda, Filipinos, Artiach, Chiquilin and Triunfo.

"We are delighted to be significantly expanding the global scope of our Nabisco biscuit brands by recovering the licenses UB has held since 2000," said Hugh Roberts, president of Kraft International Commercial.

"With our broader portfolio of strong trademarks, we look to achieve even faster growth in this key category," he said.

Kraft already owns 25% of UB. Private equity groups Cinven and MidOcean Partners own 30% each and PAI Partners has a 15% stake.

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