Mumbai: Kraft Foods Inc. of the US is looking for a buyer for its cereals business Post Cereals, which makes the Grape Nuts and Shredded Wheat brands, The Wall Street Journal reported on its website.

Kraft, the largest US food company by sales and the third in terms of cereal sales after Kellogg Co. and General Mills Inc., could get as much as $3 billion for the Post Cereals business, the report quoted sources close to the developments as saying.

PepsiCo Inc., which owns Cap'n'Crunch and Life cereal brands through its Quaker unit, is one of several logical bidders, the report said.

Kraft has disclosed financial information on Post Cereals to potential bidders and a deal could be signed later this year, the report said.

Kraft's chief executive Irene Rosenfeld, former chief executive of PepsiCo's Frito-Lay division, had said earlier this month that the company was evaluating its portfolio to divest businesses that don't fit with Kraft's strategic plan of organic growth. Those businesses, she had then said, constituted less than 5 per cent of Kraft's sales.

In fact, shareholder activist Nelson Peltz had also reportedly suggested that the company shed its Post Cereals unit.

The sale, according to market observers, is unlikely to attract much private equity attention. A credit crunch that followed the US housing loan woes has meant some recent private-equity-sponsored deals are facing financing difficulties.

Other cereal makers like General Mills Inc. and Ralcorp Holdings Inc. may also be interested in buying the Post Cereals business, the report said.

General Mills' cereal brands include Total Raisin Bran and Cocoa Puffs while Ralcorp's private-label foods include cereal.

Earlier this month Kraft reported a 0.4 per cent rise in second-quarter North American snacks and cereal unit sales at $1.6 billion with a decline in operating income.