Post Holdings buys British cereal maker Weetabix for $1.76 bn

US consumer group Post Holdings today struck a deal to buy British cereal company Weetabix Ltd from China's Bright Food Group Co Ltd and Baring Private Equity Asia for £1.4 billion ($1.76 billion) in cash in order to expand its international business.

Chinese state-backed Bright Food, the country's second-largest food company, had acquired 60 per cent of Weetabix in 2012 from majority owner private equity firm Lion Capital in a deal that valued the Northampton Shire-based company at £1.2 billion ($1.94 billion), including debt.

Lion Capital later sold the remaining 40 per cent stake to Baring Private Equity Asia

Post closing, Sally Abbott, Weetabix's director of marketing, will become managing director of Weetabix UK and Ireland and report to Rob Vitale. Giles Turrell, Weetabix's current CEO, will assume the newly created role of chairman of Weetabix with responsibility for overseeing the integration of Weetabix into the Post portfolio.

The other members of Weetabix's existing management team will continue to lead the organisation.

Post Holdings management expects to generate synergies of around £20 million annually in the third full fiscal year post-closing.

''We have long admired Weetabix as a leader in cereal and believe it will be a fantastic strategic fit within Post,'' said Rob Vitale, Post's president and CEO.

''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,'' he added.

Weetabix can trace its history back to 1932. It had been family-owned until its takeover by Texan private equity firm, Hicks, Muse, Tate and Furst in 2004 for £642 million.

It is Britain's second biggest maker of breakfast cereals and cereal bars after Kellogg, employs around 2,000 people and generates annual sales of £346 million.
 
In North America, Weetabix operates a natural and organic ready-to-eat cereal and snacks in both branded and private label, led by the Barbara's brand and the Puffins sub-brand and serving leading natural and specialty channel and conventional retailers.

Additionally, Weetabix has an established and extensive international presence, with operations in Africa through two joint ventures and a distribution export business to over 90 countries.

Post Holdings said that it has agreed in principle to establish a joint venture with Bright Food Group and an investment fund advised by Baring Private Equity Asia to manage the Weetabix China operations.

Founded by C W Post in 1895, St. Louis, Missouri-based Post Holdings is a consumer packaged goods holding company operating in the center-of-the-store, active nutrition and private label food categories.

Post Holdings' portfolio includes Honey Bunches of Oats, Pebbles, Great Grains, Pos Shredded Wheat, Post Raisin Bran, Grape-Nuts and Honeycomb.

Post Holdings also offers premium natural and organic cereal, granola and snacks through the Attune, Uncle Sam, Erewhon, Golden Temple, Peace Cereal, Sweet Home Farm and Willamette Valley Granola Company brands.

In its largest ever acquisition, Post Holdings acquired egg and dairy producer and distributor Michael Foods Inc in 2014 from GS Capital Partners, an affiliate of Goldman Sachs, for $2.45 billion.

Citing people familiar with the matter, Reuters had yesterday reported that Post Holdings was close to finalising a deal to buy British cereal company Weetabix (See: Post Holdings of US close to buying British cereal maker Weetabix for around $1.76 bn).