May 7, 2012
China's Bright Food Group Co agreed to obtain a 60% stake in British cereal maker Weetabix Ltd in an agreement worth around GBP1.2 billion (US$1.9 billion) including debt, the companies announced Thursday (May 3).
State-owned Bright Food bought the controlling interest in Weetabix from UK private-equity firm Lion Capital LLP. Lion will retain 40% ownership of the company.
Bright Food and Weetabix said their deal, which is subject to regulatory review in China and the UK, is the biggest foreign acquisition by a Chinese company in the food and beverage sector. With the necessary approvals, the deal is expected to close during the second half of this year, according to the companies' joint announcement.
"With Bright Food's strong resources and our expertise in both the Chinese and broader international markets, we are excellently placed to develop the Weetabix business," Bright Food Chairman Zongnan Wang was quoted in the statement as saying.
Bright Food had been negotiating for several weeks with Lion Capital, which bought Weetabix in 2004. The Shanghai-based maker of dairy, sugar and wine products has been actively seeking overseas food acquisitions over the past two years.
It has completed two such deals, buying a controlling stake in New Zealand's Synlait Milk Ltd for US$58 million in 2010 and agreeing last year to spend US$382 million for 75% of Manassen Foods Australia Pty.
"I think there is a place in the market for Weetabix," analyst Ben Cavender of China Market Research in Shanghai told the Financial Times. "Food safety concerns in China give Bright the opportunity to leverage that brand by saying this is a product with safe ingredients, made to international standards."
Bright Food indicated it plans to keep the current management at Weetabix. "We value the expertise of Weetabix's management and employees and look forward to collaborating with them," Wang said in the statement.
A Bright Food spokesman on Wednesday denied to China Daily that the company was in talks to acquire Weetabix.
