Bright Food Group agreed to sell Weetabix to Post Holdings, Reuters reported. The acquisition came one month after it was reported Post Holdings was one of two bidders remaining for the UK cereal manufacturer.
The Chinese owner reportedly hired Goldman Sachs in December to sell the breakfast cereal manufacturer. At the time, it was believed that Weetabix could have been sold for £1bn by the end of January.
Failed to break into the Chinese market
Weetabix’s Chinese owner was said to have put the business up for sale after it failed to break into the Chinese market, where consumers tend to eat hot breakfasts.
Bright Food acquired a 60% stake in Weetabix in 2012 for £1.2bn, in what was the largest overseas takeover by a Chinese company at the time. It wanted to invest in the long-term development of Weetabix, especially in Asia.
Nobody at Post Holdings, Bright Food or Weetabix were available for comment on the reported sale.
Expand UK and international brands
Weetabix’s sale came after it invested £30M to expand its UK and international brands in January. Weetabix chief executive Giles Turrell said at the time Weetabix doubled its business to China last year, and there was a growing demand for high quality, imported British foods.
But, Weetabix also warned of rising product prices, arising from the weak value of sterling, boosting ingredient prices. Costs were going up because wheat is priced in dollars.
Meanwhile, the number of UK and Irish businesses acquired by overseas investors accounted for 34% of all deals in the third quarter of 2016, a Grant Thornton survey revealed in February. With the weakening of the pound following the EU referendum result, overseas investors could pay 15–20% less for assets, the financial advisory firm said.
Weetabix sale – at a glance
- Bright Food reportedly to sell Weetabix to Post Holdings
- £1.4bn deal
- One of two potential buyers last month