The deal for the maker of oval-shaped cereal bricks gives Post a stronger presence in the UK, which accounted for four-fifths of Weetabix’s £346m of revenue in 2016.
The move “continues our strategy of strengthening our portfolio in stable categories and diversifying into new markets, bringing much-loved brands to significantly more customers globally,” said Post chief executive officer Rob Vitale.
The acquisition is the latest in a series of deals reshaping the packaged-food industry, with UK companies attracting outsized interest after the pound’s plunge in the wake of the vote to leave the EU reduced prices for overseas buyers. Unilever has put its ailing spreads business up for sale after rebuffing an approach from Kraft Heinz, while Reckitt Benckiser is considering a sale of its French’s foods unit after agreeing to buy infant-formula maker Mead Johnson Nutrition.
Post said Weetabix, which also owns Alpen muesli and other brands, will contribute about £120m of adjusted earnings before interest, taxes, depreciation and amortisation annually before expected cost savings of roughly £20m by the third full fiscal year after closing.
The British company’s total sales dropped 1.6%, and profit fell 15% to £84.6m. Bright Food moved to sell Weetabix after owning it for five years, during which it struggled to generate interest in cold cereals among Chinese consumers. It floated the idea of listing Weetabix in 2014, but the brand never gained enough traction in a country where consumers traditionally eat hot breakfasts like congee.
“We can see that demand for cereals is growing due to health-consciousness, especially among female consumers exposed to western lifestyles, but Weetabix did not make much inroads, probably because Bright Food does not have experience in this area,” said Jiaqi Du, research manager for packaged food at Euromonitor International in Shanghai.
China’s breakfast cereal market was worth $933m (€877.4m) in 2016, according to Euromonitor, with ready-to-eat cereals like Weetabix accounting for about one-quarter of that total.
Overseas acquisitions remain an important part of Bright Food’s strategy to become an “internationally influential, multinational company”, spokesman Pan Jianjun said. Bright Food, whose 2012 deal valued the cereal-maker at about £1.2bn, owns a 60% stake, while Baring Private Equity Asia holds the remaining 40%.