Post Holdings Swallows UK's Weetabix In £1.4B Deal

Weetabix launched its high-protein version in a bid to expand sales

Bright Food will remain as a stakeholder in the brand and continue to help it expand in the Chinese market, according to the company.

Bright Food's Pan said that Weetabix's sales in China rose sixfold in the past year in an email in February. Chinese owners, The Bright Group, took a 60% share in Weetabix in May 2012 with Baring Private Equity Asia acquiring the remaining 40% from Lion Capital in 2015. It floated the idea of listing Weetabix in 2014, but the cereal never gained enough traction in a country where consumers traditionally eat hot breakfasts like congee.

Bright Food took a 60 per cent stake in Weetabix in 2012 and tried to launch the cereal brand in China, but, despite doubling sales there in 2016, it has struggled to make a real success of it, with the United Kingdom remaining its largest market.

Post's existing brands include Grape-Nuts, Raisin Bran, Honey Bunches of Oats, and protein brands including PowerBar.

He also confirmed that Post will seek to make a £20m annual cost saving through "procurement synergies", but would not alter the size or shape of the Weetabix biscuits. "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.

"This is a part of our internationalization strategy".

China's breakfast cereal market was worth US$933m in 2016, according to Euromonitor, with ready-to-eat cereals like Weetabix accounting for about one-quarter of that total.

Hargreaves Lansdown's George Salmon said: "Weetabix has struggled to crack the Chinese market, so it is no surprise to see Bright Food sell up". It had been family-owned until its takeover by Texan private equity firm, Hicks, Muse, Tate and Furst in 2004 for £642 million. The company also owns Alpen, Britain's top-selling muesli brand.

Weetabix had earnings before interest, tax, depreciation and amortization (EBITDA) of 130 million pounds in 2016, Reuters reported in December.

Post see the deal as enabling them to them to distribute to a number of worldwide markets, as well as expanding the Weetabix branch into North America.

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