Bright Food to acquire UK cereal company Weetabix

Chinese state-owned Bright Food has entered into an agreement to acquire British breakfast cereal company Weetabix from its private equity owner Lion Capital, in the largest acquisition by a Chinese food company.

Bright Food will pay £720m to acquire 60% controlling stake in Weetabix, in a deal that values Weetabix at £1.2bn, including debt. Lion Capital and the Weetabix management will hold the remaining 40% stake in the company.

Through the acquisition, Bright Food plans to leverage the growing demand for healthy food in China and aims to boost Weetabix’s sales across Asia and North America.

Bright Food chairman Wang Zhongnan said that with the company’s strong resources and expertise in both the Chinese and broader international markets, it is well positioned to develop the Weetabix business.

The transaction, which is subject to Chinese regulatory approval, is expected to be completed in the second half of 2012. It would mark Bright Foods’ first successful transaction since buying a 75% stake in Australian food company Manassen Foods for $556m in August 2011.

Previously, the company was involved in several unsuccessful acquisition attempts. In 2010, the company failed to strike a £2bn deal to acquire UK-based United Biscuits, and in the same year, it made an unsuccessful attempt to buy Sucrogen, the sugar and biofuels division of Australia’s CSR.

In 2011, it was outbid by General Mills over the acquisition of the majority stake in French yogurt brand Yoplait.

Weetabix, founded in 1932, was family owned until it was bought by US-based Lion Capital in 2004 for £642m. The company is the second largest manufacturer of breakfast cereals and cereal bars in the UK after Kelloggs, holding a 7% share of the country’s total cereals market, with annual sales in the UK totalling £100m.

Headquartered in Kettering, UK, the company exports to over 80 countries and owns brands such as Alpen, Ready Brek and Oatibix, with annual sales of more than £420m.