Weetabix bought out of Chinese ownership after £1.4bn swoop by Post Holdings
Breakfast cereal company Weetabix has been bought out of Chinese ownership following a £1.4 billion swoop by US consumer giant Post Holdings.
The household staple has been sold by the Bright Food Group and an investment fund advised by Baring Private Equity Asia after they struggled to push the brand into China.
Weetabix, which also owns Alpen, Weetos and Ready Brek, employs 1,800 staff and secured revenues of 513 million US dollars (£409 million) and earnings of 148 million US dollars (120 million) for the year to the end of December 2016.
It has three manufacturing operations in the UK and produces all the wheat for its cereals within 50 miles of Burton Latimer, Northamptonshire.
Rob Vitale, the president and chief executive of Post, said the deal would bring exciting growth opportunities for the firm.
He said: " We have long admired Weetabix as a leader in cereal and believe it will be a fantastic strategic fit within Post.
"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."
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.
US and Asian businesses have ramped up their interest in buying British firms following the pound's 17% plunge against the US dollar since the Brexit vote.
Bright Food Group, a state-owned firm based in Shanghai, bought a 60% stake in Weetabix in 2012, with the remaining 40% being held by Baring Private Equity Asia.
As part of the deal, Post will launch a joint venture with the two Asian sellers to distribute Weetabix products throughout China.
The move will also trigger a top-level shake-up in the UK, with Sally Abbott being promoted to Weetabix managing director from director of marketing, while Weetabix chief executive Giles Turrell will become chairman.
Post, which recorded annual revenues of 5 billion US dollars (£4 billion) to September 30 last year, said the tie-up would bolster earnings by £120 million a year.
It will also deliver annual cost savings of around £20 million in three years, the firm added.
George Salmon, equity analyst at Hargreaves Lansdown, said it was no surprise Bright Food Group decided to sell the firm after struggling to crack the Chinese market.
He said: " The deal comes hot on the heels of Kraft Heinz's bid for Unilever and 21st Century Fox's approach for Sky and further transatlantic deals may be flushed out by the strong dollar and rising US interest rates.
"It's also unsurprising to see one of the UK's biggest cereal brands remain in foreign ownership, due to the pound's weakness.
"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.
"In contrast, the dollar's recent strength has helped the successful bidder, US consumer group Post Holdings."
Weetabix was founded by Bennison Osbourne and Malcolm MacFarlane in 1932 and has its UK headquarters in Kettering.
Jonathan Buxton, head of retail and consumer at Cavendish Corporate Finance, said: "Importantly, the 1.8 billion US dollar takeover of Weetabix will give Post both a significant UK presence and a greater share of the North American market.
"Post has been highly acquisitive in the past and an acquisition of Weetabix could mark the start of a spending spree on UK assets, making the most of its dollar-denominated spending power.
"While its sales in China doubled in 2016, Weetabix was put up for sale in January this year after the state-backed Chinese Bright Food failed to expand Weetabix in its home market."