One of Britain’s best loved breakfast cereals has been gobbled up by the American cereal giant Post Holdings in a £1.4bn deal.
The US maker of Golden Crisp and Cocoa Pebbles was tipped as the frontrunner in the race to buy Weetabix last month, and the long-awaited deal was finally confirmed on Tuesday.
The UK’s second biggest cereal brand was put on the blocks by China’s Bright Food, five years after the Shanghai-based company bought a majority stake for £1.2bn.
The Telegraph reported late last month that Bright Food had been hoping to fetch £1.5bn for the 84 year old business, but industry experts said that the sale process had been “challenging” given the cereal company’s recent declining sales and profits.
The last available accounts show that Weetabix sales fell by 2pc to £346.4m while profits slumped by 13pc to £94.3m.
The company has attempted to diversify by launching a breakfast drink to tap into an increasing trend for smoothies and protein-shakes. Meanwhile its range of biscuits have already been pulled after dismal sales.
Associated British Foods, which owns Jordans cereals, had also expressed an interest in buying Weetabix, while the Italian pasta maker Barilla was in the running along with Nestlé, whose cereal brands include Cheerios, and General Mills through their existing Cereal Partners Worldwide joint venture.
Giles Turrell, the chief executive of Weetabix Food Company, said: “Today’s deal is great news for the team at Weetabix and all those who love our brands. The past five years have seen us increase our branded sales at home and overseas.
“Post is a leader within its markets and shares our commitment to providing great tasting nutritious products for the whole family. I’m confident they will help us open doors for continued expansion.”
Jonathan Buxton, the head of retail and consumer at Cavendish Corporate Finance, said: “Weetabix fits very nicely with Posh Holdings, the third largest cereal company in the USA. Post already has a presence in the UK via its iconic Grape-Nuts cereal brand and its expertise in marketing and distributing a range of cereals make it a strong contender to be custodian of the various Weetabix brands.
“Importantly, the $1.8bn takeover of Weetabix will give Post both a significant UK presence and a greater share of the North American market.
“Post has been highly acquisitive in the past and an acquisition of Weetabix could mark the start of a spending spree on UK assets, making the most of its dollar-denominated spending power.”
By Jillian Ambrose and Sam Dean
Source: The Telegraph
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