A bidding war has broken out over UK snack company United Biscuits as two foreign firms fight to take control.

The bidding battle started when a US consortium led by snacks giant Nabisco increased its offer for UB to 254p a share, valuing United at £1.2bn.

Just three hours later a European consortium, Finalrealm, trumped the bid with an offer of 265p a share, pushing the value of UB up to £1.26bn.

UB directors spent most of Thursday locked in talks believed to be about the group's future.

The US consortium of Nabisco and investment firm Hicks, Muse, Tate & Furst promised on Wednesday to increase their joint offer to at least £1.2bn following reports that their first offer of £1.16bn had been trumped by Finalrealm.

The new offer on the table by the US consortium, which formed the Burlington Biscuits company specifically to make an offer for UB, represents an increase of 9% on its first bid.

It is also 35% higher than the 188p closing price of UB shares on 1 October, the day before United said it was in talks which could lead to an offer being made.

John Muse, chief operating officer of Hicks and Muse and head of the firm's London office, said: "Hicks Muse and Nabisco look forward to the independent directors of UB recommending our revised offer at the earliest opportunity."

Burlington has already bought a 29.9% stake in United Biscuits.

However, Finalrealm later trumped the new bid with an offer of 265p a share.

The company also said that UB investors would be able to keep their interim dividend of 3.6p if its bid were accepted.

"Shareholders are urged to take no action pending the board's decision, which it is hoped will be made shortly," Finalrealm said.

Finalrealm is made up of venture capital group Cinven, French private equity firm PIA, an affiliate of BNP-Paribas, and DB Capital Partners, an affiliate of Deutsche Bank.

Underperforming

The battle to win control of UB, which makes the well-known Penguin and McVitie's brands as well as KP snacks, began in October when the company let it be known it was struggling and was open to offers.

UB's woes have largely been the result of supermarket price wars, which have put pressure on its margins. It concluded that it needed to be part of a larger concern to be able to compete.

If successful in its bid, it is understood Finalrealm would sell some of UB's assets to Groupe Danone, France's largest food group.

When Burlington made its original offer, it said that after the takeover, Nabisco would merge its own European and Middle Eastern operations with UB, creating a new firm called Burlington Biscuits Holdings, in exchange for a 23% stake in the new company.

Nabisco would also buy from Burlington UB's interests in China, Hong Kong and Taiwan.

UB chairman Sir Gordon Hourston said: "A sale of the business, at an appropriate price, provides the best route forward for shareholders."

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United Biscuits describes itself as an international food group with operations in 22 countries, employing 22,500 people around the world - about 19,000 of those in the UK.

It says international biscuit sales are approaching £1bn and that its UK snacks business boasts sales worth more than £300m. It also says it is the fourth-largest biscuit company in the world and number two in Europe.