Kraft Foods Inc. is in the early stages of looking for a buyer for its Post cereals business, maker of the Grape Nuts and Shredded Wheat brands, the Wall Street Journal reported on its Website on Thursday.

PepsiCo Inc., which owns Cap'n Crunch and Life cereal brands through its Quaker unit, is one of several logical bidders, the Journal reported, citing sources familiar with the matter.

Kraft, which ranks No 3 in the U.S. for cereal sales after Kellogg Co. and General Mills Inc., could fetch as much as $3 billion for the Post business, according to one of the people who spoke to the Journal.

Kraft, the largest U.S. food company by sales, has sent financial information on Post to potential bidders, the Journal reported, citing the same person, and a deal could be signed later this year.

Neither Kraft nor Pepsi could immediately be reached for comment.

Kraft Chief Executive Irene Rosenfeld said earlier this month the company was reviewing its portfolio and will divest of businesses that do not fit.

Rosenfeld, former chief executive of PepsiCo's Frito-Lay division, did not say at the time if any divestiture plans were connected to any meetings with shareholder activist Nelson Peltz, who has reportedly suggested the company shed its Post Cereals unit.

Unlike other recent consumer-asset sales, private-equity firms are not expected to figure significantly as bidders for Kraft's cereals business, the Journal reported.

Shaky credit markets have meant some recent private-equity-sponsored deals have faced financing difficulties.

Pepsico