Post Holdings the cereal company based in the U.S. agreed to acquire Britain-based Weetabix from Bright Food Group in China for a price of £1.4 billion or $1.76 billion. The deal expands Post’s international footprint.
The deal adds Weetabix, Barbara, and Alpen brands to a cereal portfolio that already includes Grape-Nuts and Honey Bunches of Oats. It allows for greater distribution of Post’s products in many international markets, while it will expand Barbara and Weetabix’s exposure in North America.
Post’s CEO Rob Vitale said in a prepared statement that the acquisition combines two category leaders that continue the company’s strategy of making its portfolio stronger in the stable categories while diversifying into more new markets.
Weetabix is the second largest British ready to eat cereal maker and is the nation’s No. 1 selling brand.
The deal brings to an end the Chinese ownership of Britain’s beloved brand after Bright Food took over the company in 2012 from Lion Capital amidst a big push overseas from Israel to Australia.
Bright agreed to a stake of 60% during 2012 in Weetabix from Lion Capital a private equity company. That deal valued Weetabix at £1.2 billion.
Post announced that the deal would immediately add to adjusted operating profit margins as well as its cash flow, excluding transaction expenses that are one-off.
Post affirmed as well its outlook for 2017 and posted its March 31 ending first quarter financials.
Post had net sales that reached $1.25 billion and a $4 million net loss.
The U.S. company said it is expecting its adjusted earnings in 2017 prior to EBITDA to be between $920 million and $950 million, excluding any Weetabix contribution.
The sale has not brought an end to the international ambitions of Bright, a spokesperson for the Shanghai-based company said.
The spokesperson called the move part of its strategy of internationalization, adding that selling assets will enable it to expand better. Moving forward, Bright is sticking to its international push, said the spokesperson.
Weetabix was founded over 85 years ago. Goldman Sachs was hired by Bright to run an auction to purchase the British brand, which came about less than 5 years after Bright took control of Weetabix.
Bright has struggled to break into the market in China, where a large number of consumers prefer to eat hot breakfasts.
Earnings at Weetabix prior to EBITDA in 2016 were £130 million.