LONDON/SHANGHAI/NEW YORK (Reuters) - Post Holdings (POST.N) is buying leading British breakfast cereal brand Weetabix from China’s Bright Food Group Co Ltd [SHMNGA.UL] for 1.4 billion pounds ($1.8 billion), giving the U.S.-focused company a European base on which to build.

The combination will help Post’s existing brands, which include Honey Bunches of Oats and Grape-Nuts, to expand overseas, while allowing for greater distribution of Weetabix and its Barbara’s brand in North America, the St.Louis-based company said on Tuesday.

The acquisition of Weetabix’s manufacturing and distribution assets in Europe should also allow Post to more easily digest other overseas businesses that might become available, in cereal and beyond, Chief Executive Rob Vitale said.

“What this does is allow us to look at a broader array of opportunities,” Vitale told analysts, noting that Post regularly looks at several M&A; opportunities at the same time.

The sale comes just five years after Chinese state-owned Bright Food took control of Weetabix in a deal that valued it at 1.2 billion pounds at the time of a major overseas push stretching from Australia to Israel.

The brand has struggled to grow significantly since as cold cereals in Western markets face more competition from breakfast bars and Greek yogurt, and consumers grow more concerned about how much sugar is in what they eat.

Vitale said Weetabix had 2016 revenue of 410 million pounds, which was not that much higher than in 2015. Looking ahead, he said Weetabix’s revenue would remain flat, with earnings being boosted by cost-savings from combining the businesses.

SOME LIKE IT HOT

In China, which had been central to Bright Food’s purchase, retail sales of cold cereal have nearly doubled over the past five years, but it remains a relatively small category, as most locals prefer hot breakfasts.

“It’s probably going to be a much better fit with Post,” said Liberum analyst Robert Waldschmidt.

Post has agreed in principle to establish a joint venture with Bright Food and Baring to manage the Weetabix China operations, which remain a very small part of the business.

The latest sale price, 1.4 billion pounds, is 11.7 times the 120 million pounds of adjusted annual EBITDA (earnings before interest, tax, depreciation and amortization) that Post said Weetabix will contribute before cost savings. It estimates those savings to reach 20 million pounds per year by the third full fiscal year after the deal is completed.

Vitale said the multiple was higher than its past deals, but said it was justified by Weetabix’s strong market share, future expansion opportunities, Post’s ability to fund it in cash and the favorable tax environment in Britain.

Still, Post shares were down 2 percent in early trade in New York, underperforming the S&P; 500 index .SPX, which was broadly flat.

SHOPPING FOR FOOD BRANDS

For Bright Food, which makes dairy products, candy and other foodstuffs, the sale does not mean an end to its international ambitions, Shanghai-based Bright spokesman Pan Jianjun said.

“This is a part of our internationalization strategy. Selling assets enables us to better expand. Going forward Bright will stick to our overseas push,” he said.

The sale would give Bright extra firepower should it want to bid for any other food assets currently on the block.

The global packaged food industry is in the midst of a wave of dealmaking, with giants Unilever (ULVR.L) UNc.AS and Reckitt Benckiser (RB.L) both selling multi-billion-dollar food assets.

Bright Food took control of Weetabix from private equity firm Lion Capital, which had held its stake for over a decade. Baring Private Equity Asia subsequently bought Lion’s remaining stake in 2015.

Packets of Weetabix cereal and other food goods are seen inside the Ocado Customer Fulfilment Centre in Hatfield on the outskirts of London, Britain, April 6, 2016 . REUTERS/Dylan Martinez

Post said the deal will immediately add to its adjusted operating profit margins and its free cash flow, excluding one-time transaction expenses. It expects to fund the deal with cash on hand and borrowings under its existing credit facility.

Post also reported net sales for the second quarter of $1.25 billion, a net loss of $4 million and adjusted EBITDA of $228 million. It affirmed its 2017 adjusted EBITDA of $920 million to $950 million, excluding any contribution from Weetabix.

Post was advised by Barclays, Rabobank, Credit Suisse and Nomura. Reuters reported exclusively in December that Bright had hired Goldman Sachs to advise it on a sale.</s>BEIJING: China’s second-largest food company Bright Food Group has agreed to sell British-based breakfast cereal maker Weetabix to US company Post Holdings in a deal worth 1.4 billion pounds ($1.8 billion), Bloomberg News said Tuesday.

State-owned Bright Food bought a 60 percent stake in Weetabix for 1.2 billion pounds in 2012, part of an aggressive search for overseas assets as it sought to expand its global footprint.

At the time the deal was the largest overseas acquisition by a Chinese company in the food and beverage sector.

A Bright Food spokesman confirmed to Bloomberg that the Shanghai-based company would sell its stake to cereal manufacturer Post, with Baring Private Equity Asia holding the remaining 40 percent.

He said Weetabix’s China sales had risen sixfold in the past year but the company still sells most of its product in Britain, since Chinese consumers are unused to eating cold cereal for breakfast.

Overseas acquisitions remain an important part of Bright Food’s plan to become an “internationally influential, multinational company”, the spokesman added.

Weetabix’s total sales in 2016 as of January 2 dropped 1.6 percent year-on-year, and profit fell 15 percent to 84.6 million pounds, according to Bloomberg.

Based in Northampton in central England, it employs about 1,800 staff worldwide and its cereals are exported to more than 80 countries.</s>U.S. cereal company Post Holdings Inc. agreed to buy Weetabix Ltd. from Bright Food Group Co. of China for 1.4 billion pounds ($1.8 billion), adding the British breakfast staple to a portfolio that includes Grape Nuts and Honey Bunches of Oats.

The deal for the maker of oval-shaped cereal bricks gives Post a stronger presence in the U.K., which accounted for four-fifths of Weetabix’s 346 million pounds of revenue in the year ended Jan. 2, 2016, according to financial statements.

The purchase “continues our strategy of strengthening our portfolio in stable categories and diversifying into new markets, bringing much-loved brands to significantly more customers globally,” Post Chief Executive Officer Rob Vitale said in a statement Tuesday.

The acquisition is the latest in a series of deals reshaping the packaged-food industry, with U.K. companies attracting outsize interest after the pound’s plunge in the wake of the vote to leave the European Union reduced prices for overseas buyers. Unilever has put its ailing spreads business up for sale after rebuffing an approach from Kraft Heinz Co., while Reckitt Benckiser Group Plc is considering a sale of its French’s Foods unit after agreeing to buy infant-formula maker Mead Johnson Nutrition Co.

Post said Weetabix, which also owns Alpen muesli and other brands, will contribute about 120 million pounds of adjusted earnings before interest, taxes, depreciation and amortization annually before expected cost savings of roughly 20 million pounds by the third full fiscal year after closing.

The British company’s total sales dropped 1.6 percent last year, and profit fell 15 percent to 84.6 million pounds.

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 $933 million 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 by phone.

Bright Food, whose 2012 deal valued the cereal-maker at about 1.2 billion pounds, owns a 60 percent stake, while Baring Private Equity Asia Ltd. holds the remaining 40 percent.

Barclays, Rabobank, Credit Suisse and Nomura acted as financial advisers to Post, the U.S. company said. It expects the deal to be completed in the third quarter.

The U.S. cereal maker also forecast net sales of about $1.25 billion in the second fiscal quarter ended March 31, with a net loss of around $4 million, in reporting preliminary, unaudited financial data.</s>SHANGHAI/NEW YORK, April 18 (Reuters) - U.S. cereal company Post Holdings has agreed to buy British brand Weetabix from China's Bright Food Group Co Ltd in a 1.4 billion pound ($1.76 billion) deal that will expand its international business, the companies said on Tuesday.

The deal will add the Weetabix, Alpen and Barbara's brands to a portfolio of cereals including Honey Bunches of Oats and Grape-Nuts. It will allow for expanded distribution of Post products in a number of international markets, while expanding Weetabix and Barbara's in North America.

"Combining together two category leaders continues our strategy of strengthening our portfolio in stable categories and diversifying into new markets," said Rob Vitale, Post's chief executive, in a statement.

Weetabix is Britain's second-largest ready-to-eat cereal maker overall, and Weetabix is the nation's top-selling brand.

The sale marks the end of Chinese ownership of Weetabix after state-owned Bright Food took control of the company from Lion Capital in 2012 amid a major overseas push stretching from Australia to Israel.

Bright agreed to buy a 60 percent stake in Weetabix in 2012 from private equity firm Lion Capital in a deal that valued it at 1.2 billion pounds. Baring Private Equity Asia subsequently bought Lion's remaining stake in 2015.

Post said the deal will immediately add to its adjusted operating profit margins and its free cash flow, excluding one-time transaction expenses.

Post also affirmed its 2017 outlook and reported financial results for the second quarter ended March 31. It posted net sales of $1.25 billion and a net loss of $4 million.

It said it still expects 2017 adjusted earnings before interest, tax, depreciation and amortization (EBITDA) of $920 million to $950 million, excluding any contribution from Weetabix.

The sale did not signal the end of Bright's international ambitions, Shanghai-based Bright spokesman Pan Jianjun said.

"This is a part of our internationalisation strategy. Selling assets enables us to better expand. Going forward Bright will stick to our overseas push," he said.

Reuters reported in January that Post Holdings, the No.3 U.S. cereal company, was among four interested parties vying for Weetabix, a business founded 85 years ago.

Bright hired Goldman Sachs to run an auction for the well-known British brand less than five years after the Chinese company agreed to take control of it, with sources familiar with the matter saying Bright it had struggled to crack the Chinese market, where many consumers tend to eat hot breakfasts.

Weetabix had earnings before interest, tax, depreciation and amortisation (EBITDA) of 130 million pounds in 2016, Reuters reported in December.

Bright Food is the parent firm of a number of listed companies including Bright Dairy and Food Co Ltd. ($1 = 0.7938 pounds) (Additional reporting by Martinne Geller in London and Parikshit Mishra in Bengaluru; Editing by Stephen Coates and Keith Weir)</s>CHINA'S Bright Food Group Co Ltd has agreed to sell iconic British cereal brand Weetabix to US cereal company Post Holdings for US$1.76 billion, a spokesman for the Chinese conglomerate said on Tuesday.

The sale, if completed, would mark the end of Chinese ownership of the</s>Post Holdings Inc. has finalized a deal to acquire Weetabix Food Co., maker of the iconic U.K. breakfast brand, in a deal that is expected to value Weetabix at more than £1.4 billion, ($1.76 billion) according to a person familiar with the matter.

It is the latest in a string of acquisitions by the U.S. cereal maker to help offset a slow-growth environment for many packaged foods.

Post POST, +0.87% beat out a number of other bidders including Associated British Foods ASBFY, +2.10% ABF, -0.04% and Italy’s Barilla Group, and the deal, unless delayed, is expected to be announced this week, according to the person.

Post, whose cereal brands include Honey Bunches of Oats and Great Grains, is acquiring Weetabix from China’s Bright Food Group Co., a Chinese food conglomerate operating across Asia Pacific, and minority shareholder Baring Private Equity Asia, a private-equity firm. Bright acquired 60% of Weetabix in 2012 from London-based buyout company Lion Capital LLP, in a deal that valued the U.K. cereal company at £1.2 billion, including debt. Baring has owned the remaining stake since 2015.

An expanded version of this report appears on WSJ.com.</s>The Chinese owner of Weetabix is selling the iconic cereal firm to US company Post Holdings, according to reports.

Citing a spokesman for the Chinese conglomerate, Reuters on Tuesday reported that the company was being sold by Bright Food Group for $1.8bn (£1.4bn).

Back in January, Reuters reported that Post Holdings was among four bidders vying for Weetabix, the other bidders being Associated British Food, Cereal Partners Worldwide and Italian pasta maker Barilla.

Weetabix, which also makes Alpen cereal, Weetos and Oatibix, was family owned until 2003.

In 2012, Shanghai-headquartered Bright Foods Group bought a majority stake in the brand, but in December last year the owners reportedly hired banks to lead a sales process.

Bright Foods Group had hoped that Weetabix would help it crack the lucrative Asian market but, most of Weetabix’s sales still come from its much slower-growth home market.</s>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.

200 Voices: find out more about the people who have shaped Scotland</s>State-owned Bright Food said on Thursday it would buy 56 percent of dairy firm Tnuva from private equity house Apax APAX.UL, under the terms of a preliminary accord.

Bright Food did not disclose the sum, but Israel's Mivtach Shamir Holdings ( ), another major shareholder in Tnuva, said the deal valued all of the dairy company at about $2.5 billion, up from $1 billion when Apax and Mivtach took control in 2008.

The deal, the latest in a multi-billion dollar overseas acquisition spree by Bright Food, will give the Chinese firm access to new cheese products and the Israeli firm's technological know-how in dairy production, trade sources and analysts said.

Best known for its cottage cheese, Tel Aviv-based Tnuva had 2013 revenue of 7.17 billion shekels ($2.05 billion) from the sale of a range of cheeses, as well as milk, yoghurt, meat and eggs.

The sale of one of Israel's leading companies has been strongly criticized by some Israeli lawmakers.

"What normal country puts its food security and its entire milk industry in the hands of China?" said opposition member of parliament Shelly Yachimovich, who called for Tnuva instead to be floated on the Tel Aviv Stock Exchange.

But Israel's government has recently been encouraging more Chinese investment in the country.

The deal is one of the biggest ever in Israel's consumer goods market. While large foreign acquisitions of Israeli high-tech firms are common, companies focused on its small domestic market are viewed as less attractive.

The investment comes as increasingly affluent Chinese consumers opt to pay more for imported goods in the wake of safety scandals in local food supply chains, attracting the attention of global food giants as well as China's producers.

The Chinese cheese market will be worth 2.7 billion yuan ($433.13 million) this year, doubling to 5.3 billion yuan by 2018, according to consultancy Euromonitor.

"China is still a niche market but there's lots of room for growth. We're getting increasing interest from international clients who are interested in China," said Matthieu David-Experton, Shanghai-based CEO at Daxue Consulting.

"The imported aspect is key because it makes it a more premium product in China and plays into the food safety trend," he said.

Mivtach said it was holding talks with Bright Food as to whether it will join Apax in the deal and sell its 21 percent stake in Tnuva. Mivtach has a "tag-along" option giving it the right to sell its stake together with the Apax sale.

Bright Food will pay Apax slightly less than $1 billion in cash for its 56 percent stake and will assume Apax's share of bank loans totalling 1.9 billion shekels, said a source with knowledge of the deal. If it also buys Mivtach's stake then Bright Food will take on the full loans amount. No deal with the banks has been reached yet.

One option being considered by Bright Food is to bring in a partner, Chinese state-supported private equity firm Sailing Capital Management, to buy Mivtach's stake, the source said.

A group of kibbutzim, or cooperative farms, own the rest of Tnuva. Bright Food said it would look to strengthen cooperation with smaller shareholders, rather than buy them out, and hopes to close the deal by the end of the year.

As China's cheese market has developed, Bright Food has lost out. The country's dominant cheese producer with a quarter of the market by value in 2009, it dropped down to 8.3 percent last year, according to Euromonitor data.

The deal could also give Bright Food access to Tnuva's dairy processing technology, increasing its dairy output, analysts said. Bright Food was China's fourth-biggest dairy producer last year by retail value.

"Israel is a country with highly developed agriculture and animal husbandry techniques. Tnuva, as Israel's largest food company, has a long history and various products and large market share," a Bright Food spokesman said in a text message to Reuters.

Bright Food has been making ripples globally in the past few years, with deals to buy Australian branded food business Manassen Foods and British breakfast cereal maker Weetabix that valued the firms at A$500 million ($460.85 million) and 1.2 billion pounds ($2.03 billion) respectively.

In January, Bright Food bought Australian dairy company Mundella Foods, while previous purchases included New Zealand's Synlait Milk Ltd ( ).

Bright Food owns four Chinese mainland-listed companies including Shanghai Jinfeng Wine Co ( ), Shanghai Haibo Co ( ), Shanghai Maling Aquarius Co ( ) and Bright Dairy & Food Co ( ).</s>Bright Food Group of China agreed to sell Weetabix to Post Holdings for about £1.4 billion after owning the British breakfast staple for five years, during which it struggled to interest Chinese consumers in cold cereal.

When Bright Food acquired the maker of the oval-shaped cereal bricks in 2012 it said it wanted to grow the brand in China and overseas. It floated the idea of listing Weetabix in 2014, but the cereal 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,” Jiaqi Du, research manager for packaged food at Euromonitor International in Shanghai, said by phone.

The deal gives Post, the owner of brands such as Grape Nuts, Shredded Wheat and Honey Bunches of Oats, a stronger presence in the UK.

The country accounted for four-fifths of Weetabix’s 346 million pounds of revenue in the year ended January 2nd, 2016, according to financial statements. Total sales dropped 1.6 per cent from a year earlier, and profit fell 15 per cent to £84.6 million.

Overseas owners of British companies have been hit by the fall in the pound since the vote to leave the European Union, which reduces their earnings when converted into local currencies. Yet Brexit has prompted a flurry of acquisitions by cutting the price of UK assets.

The Weetabix deal was confirmed by Bright Food spokesman Pan Jianjun by phone on Tuesday. Bright Food, whose 2012 deal valued the cereal-maker at about 1.2 billion pounds, owns a 60 per cent stake, while Baring Private Equity Asia Ltd. holds the remaining 40 per cent.

Representatives for Post didn’t respond to requests for comment. China’s breakfast cereal market was worth $933 million in 2016, according to Euromonitor, with ready-to-eat cereals like Weetabix accounting for about one-quarter of that total.
American consumer goods company Post Holdings agrees to acquire British cereal maker Weetabix Limited from China's Bright Food for $1.8 billion.