Baring Asia to exit Weetabix as Bright Food agrees $1.76b sale

The buyer is Post Holdings, owner of brands such as Grape Nuts, Honey Bunches of Oats, Bran Flakes and Shredded Wheat. The acquisition will bring Alpen, Ready-brek, Weetos, and Alpen cereal bars to its portfolio, in addition to the eponymous Weetabix brand. It represents another consolidation play by Post, which has bought numerous cereals, snacks and protein bar assets over the last few years.

Bright Food acquired a 60% interest in Weetabix from Lion Capital in 2012 at an enterprise valuation of approximately GBP1.2 billion (then $1.9 billion). Lion retained 40% and exercised its right to put this stake to Bright Food in April 2015. Lion took Weetabix private in 2004 in a deal worth GBP642 million and made a near 5x return on the investment, including final sale value and dividend payments.

Bright Food didn’t want to have full ownership of the company so the 40% holding was sold on to Baring Asia in September 2015. The private equity firm invested at enterprise valuation of GBP1.29 billion (then $2 billion), saying at the time that Weetabix was “well positioned to take advantage of the strong consumer demand in China for high-quality and nutritious food products."

Weetabix is said to have struggled to gain traction in a market where wholegrain biscuit cereal is far removed from traditional staples such as rice-based porridge. Bright Food has also faced difficulties internally – ranging from the jailing of its former chairman to plunging raw milk prices in its core dairy business – although the company has said it remains committed to pursuing international brands and technologies.

Baring Asia said in a statement that Weetabix products are now available through more than 7,000 points of sale in China - as well as online - up from a nominal distribution base at the time of initial investment. Guy Cui, a managing director with the firm, added that there is significant potential for further growth in the country.

Post has agreed in principle to establish a joint venture with Bright Food and Baring Asia to manage the Weetabix China operations, but the real draw for the US company is a strong presence in the UK market – Weetabix is the country’s second-largest ready-to-eat cereal brand and Alpen is the number one muesli brand – and a distribution and export business that covers more than 90 countries.

“We have long admired Weetabix as a leader in cereal and believe it will be a fantastic strategic fit within Post,” Rob Vitale, Post’s president and CEO, said in a separate statement. “Combining together two category leaders continues our strategy of strengthening our portfolio in stable categories and diversifying into new markets, bringing much-loved brands to significantly more customers globally. We are excited about the growth opportunities that this acquisition brings.”

Post reported sales of $5 billion for the 12 months ended September 2016, up from $4.64 billion the previous year. Over the same period, net losses narrowed from $115.3 million to $3.3 million. It expects Weetabix to contribute approximately GBP120 million in annual adjusted EBITDA before the realization of cost synergies of around GBP20 million per year.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Greater China
• Europe
• Trade sale
• Consumer
• China
• Exit
• Baring Private Equity Asia