Hungry Americans tuck into £1.4bn Weetabix

Weetabix 'set to be sold to US firm'

St Louis-based Post is the third biggest cereal-maker in America, with 8,700 staff and brands such as Pebbles, Malt-O-Meal and Better Oats.

The deal for the business, which is also behind the Weetos and Ready Brek labels, comes months after Goldman Sachs was hired to handle the sale.

Weetabix was bought in 2012 by Bright Food, which bought a 60 per cent stake from Lion Capital in a deal that valued the brand at £1.2bn. The deal signals Bright Food's struggle to appeal to Chinese consumers, who prefer hot rice meals over the United Kingdom staple.

Post Holdings - the third largest cereal company in the United States - will add Weetabix to its brands, which includes Golden Crisp, Cocoa Pebbles and Great Grains.

It affirmed its 2017 adjusted EBITDA of US$920 million to US$950 million, excluding any contribution from Weetabix. "UK-listed Associated British Foods was rumoured to have been interested in a deal, but any domestic buyers would have had to overcome the headwind of the pound's reduced buying power", Salmon said. Baring Private Equity Asia bought Lion's remaining stake in 2015.

"This is a part of our internationalisation strategy".

A customer places a packet of Weetabix breakfast cereal into a shopping cart at a supermarket in Slough, UK. Going forward Bright will stick to our overseas push.

The combination of Post and Weetabix creates a diversified global food company with substantial free cash flow generation, enabling Post to fund growth over the long-term, including worldwide cross-selling opportunities through expansion of Post products in select global markets and further expansion of Weetabix and Barbara's in North America.

At the time the deal was the largest overseas acquisition by a Chinese company in the food and beverage sector. "It's also unsurprising to see a United Kingdom brand stay in foreign hands, due to the weak pound".

Weetabix and Post Holdings were not immediately available for comment.

Related News: