Lion to make 5x money on Weetabix sale to Bright Food
Consumer investor Lion Capital has sold 60% of UK-based cereal company Weetabix to China’s Bright Food Group, in a deal that values the company at GPB1.2 billion ($1.9 billion), including debt. The move comes weeks after the buyer denied reports that it was in talks to purchase the business.
Once the remaining 40% of shares that continue to be held by Lion and company management have been sold to Bright Food, expected in two to three years, Lion should make nearly 5x its money, according to a source cited by unquote". The private equity firm is said to have already reaped a 3x return on its initial investment through several dividend payments.
Lion received legal advice from Weil on the sale, while Bright Food was advised by Rothschild and Linklaters.
Weetabix has been on the block since the middle of last year, and the sale comes after the company refinanced GBP900 million in outstanding debt. It required 80% acceptance to extend its loans but managed to get almost 90% as a result of paying down some debt with cash and sweetening the deal with margin uplift.
Lion (then Hicks Muse Tate and Furst) took Weetabix private in 2004 in a deal that valued the business at GBP642 million. The firm paid GBP268.75 per ordinary share and GBP53.75 for each ordinary A share.
At the time of the take-private, Weetabix reported turnover of GBP361.6 million and pre-tax profits of GBP44.4 million. By 2010, the business reported a gross profit of GBP20.4 million from revenues of GBP449 million. Weetabix employed 1,700 people at the time of the initial buyout and 1,800 today.
Weetabix's brands include Alpen, Weetabix, Weetos and Ready Brek. The company was founded in 1932 and now accounts for 7% of the total cereal sales in the UK. It exports to 80 countries worldwide.
Bright Food, one China's biggest food companies, last year finally realized its long-held ambition to gain a foothold in overseas markets with the acquisition of a 75% stake in Australia's Manassen Foods from CHAMP Private Equity. The transaction valued the company at more than $525 million.
Bright Food had previously tried and failed to invest in assets including yogurt brand Yoplait, CSR's sugar and bio-ethanol business Sucrogen, UK consumer brand United Biscuits and US nutritional supplement retailer GNC Holdings.
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