Bright Food has acquired control of U.K. breakfast cereal maker Weetabix as part of an overseas buying spree that has seen the state-owned Chinese group bidding for some of the world’s most famous food brands.
Bright, one of China’s largest food groups, bought a 60 per cent stake from private equity group Lion Capital, which retains 40 per cent of Weetabix shares. The deal, announced Thursday, values Weetabix at £1.2-billion ($1.9-billion U.S.) including debt.
Successful conclusion of the deal would mark Bright’s first big European brand acquisition after a string of high-profile failures.
Bright lost out to General Mills Inc. last year in its bid to purchase a stake in French yogurt maker Yoplait, and it earlier walked away from talks to acquire another UK brand, United Biscuits, maker of Jaffa Cakes and Hula Hoops.
Bright has had more success recently in Australia, where it last year acquired a 75 per cent stake in Manassen Foods.
The two sides said Thursday’s deal, which is subject to regulatory approvals in China and to anti-trust approvals, is the largest overseas acquisition by a Chinese company in the food and beverage sector.
Wang Zongnan, chairman, said Bright plans to expand the Weetabix brand in Asia and particularly in China. While breakfast habits on the mainland, where breakfast foods like rice gruel or deep fried dough are often bought from street vendors, are very different from those in the west, food analysts in China say Western eating habits are beginning to catch on.
According to figures from Euromonitor, the breakfast cereal market in China had sales of only 1.2 billion renminbi last year, but has seen double-digit growth for several years and is forecast to expand 12.5 per cent this year.
“I think there is a place in the market for Weetabix,” said Ben Cavender of China Market Research in Shanghai. “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.”
However, Bright may want to adapt the product for Chinese tastes, he added.
Torsten Stocker, partner at Monitor Group, the consulting firm, said that with the purchase, Bright may be keen to acquire management expertise as well as the brand itself.
“I think learning from Weetabix marketing and product development skills may be more important than bringing the brand into China, given the very different breakfast habits”, he said.
Bright signaled that it planned to retain the current management of Weetabix: “We value the expertise of Weetabix’s management and employees and look forward to collaborating with them,” Mr Wang said in a statement.
The Chinese group has made no secret of its appetite for well-known foreign brands. It said in February that it plans to make one or two overseas acquisitions this year in the sugar, dairy, wine and food industries.
Weetabix’s private equity owner, said people close to the situation, had been in talks with the Shanghai-based group for several weeks about a possible sale of the producer of Ready Brek and Alpen cereals. Chinese state-owned newspapers on Wednesday carried a statement from Bright denying that it was in talks to acquire the U.K. group.