China’s Bright Food Group has agreed to sell the Weetabix brand to US cereal company Post Holdings for £1.4bn.
The sale marks the end of Chinese ownership of Weetabix after state-owned Bright Food agreed to buy a 60% stake in the company in 2012 from British private equity firm Lion Capital in a deal valued at £1.2bn.
Baring Private Equity Asia—one of Asia’s largest private equity groups, owns the remaining 40% stake.
A Bright Food spokesman confirmed that the Shanghai-based company would sell its stake to cereal manufacturer Post, with Baring Private Equity Asia holding the remaining 40%, according to Bloomberg.
The spokesman added that overseas acquisitions remained an important part of Bright Food’s plan to become an “internationally influential, multinational company”.
Despite sales doubling in China last year, the country’s uptake of the cereal had been slower than the company had hoped for with Chinese consumers still preferring hot, rice-based breakfasts, the BBC reported.
Jaiqi Du, research manager for packaged food at Euromonitor International, said China’s breakfast cereal market was worth $933m in 2016 but it had struggled to generate interest in cold cereals.
“We can see that demand for cereals is growing due to health-consciousness, especially among female consumers exposed to Western lifestyles, but Weetabix did not make much inroads, probably because Bright Food does not have experience in this area,” she said.
Weetabix’s revenues of £346m in 2015 were 2% lower than in 2012, while its pre-tax profits were down 1% to £94.3m over the same period, according to its accounts.
Post Holding is the third largest cereal company in the US and the deal is set to add the Weetabix, Alpen and Barbara’s brands to their portfolio of breakfast foods, which include Bran Flakes, Golden Crisp and Cocoa Pebbles.
Post Holding chief executive Rob Vitale said the move would be a fantastic strategic fit within the company.
“It affords Post a truly iconic brand,” he said.
“We tend to use the term loosely, but it fits with the UK’s national heritage and deserves the term.
“Weetabix sits within a mature market but maintains its status in the world’s second-largest cereal market.”
Weetabix is the UK’s best-selling cereal brand, ahead of Quaker Oats and Kellogg’s Crunchy Nut, according to Nielsen figures from October 2016.
Vitale added the focus of the acquisition would be to make sure that Weetabix continued to perform strongly within the UK, while acting as a platform for Post to expand its footprint in the country.
Other groups that considered buying Weetabix had included the UK’s Associated British Foods and Cereal Partners, a joint venture between Nestle and General Mills, along with pasta maker Barilla also expressing an interest earlier in the sales process, according to Reuters.
The deal gives Post a stronger presence in the UK, which accounted for four-fifths of Weetabix’s £346m of revenue in the year ended 2 January 2016, according to financial statements.
Giles Turrell, CEO of Weetabix, said he welcomed the news.
“The past five years have seen us increase our branded sales at home and overseas,” he said.
“I’m confident they [Post Holdings] will help us open doors for continued expansion.”
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