The owner of Weetabix has confirmed today that it has agreed a deal to sell the business to US firm Post Holdings for around $1.8bn (£1.4bn).
China’s Bright Food bought a majority stake in the UK’s second biggest cereal brand for £1.2bn five years ago. However, after failing to crack the Chinese market with Western breakfast cereals, it put Weetabix up for sale at the beginning of the year. Other bidders are said to have included Associated British Foods, Cereal Partners Worldwide and Italian pasta maker Barilla.
While Weetabix doubled its sales in China last year, around 80% of its £350m turnover still comes from the UK where it has faced tough competition from discounter’s own label cereals and pressure from the fall in the value of the pound.
Post Holdings is the third-largest cereal firm in the US and owns brands such as Golden Crisp, Cocoa Pebbles, and Great Grains. In the year to 30 September 2016, the group’s sales rose 8.1% to $5.03bn.
Rob Vitale, Post’s Chief Executive, described Weetabix as a “truly iconic brand”, adding that the focus of the acquisition would be to make sure that the company continues to perform strongly within the UK, while acting as a platform for Post to expand its offering in the country.
The company said it expects to make annual savings of around £20m from the deal via from procurement synergies.
- Whilst there will be some ingredients purchasing synergies…
- The key opportunity has to be optimising a £380m launch platform and ability to increase muscle with the mults.
- Time for an anticipatory reassessment of the cereal competitive landscape…