Pan-Asia investment manager Baring Private Equity Asia together with Shanghai-based state-owned enterprise Bright Food Group (Bright Foods) have sold all of their interest in UK breakfast foods company Weetabix to New York-listed Post Holdings for £1.4 billion ($1.8 billion; €1.7 billion).
Baring Asia did not disclose returns from the exit but a source with knowledge of the matter said the returns were within the firm’s expectations. Baring Asia bought consumer-focused firm Lion Capital’s 40 percent stake in Weetabix in November 2015 for an undisclosed sum, through its 2010-vintage, $2.5 billion Asia buyout fund Baring Private Equity V. Bright Foods owned the remaining 60 percent of the company, which it bought in 2012.
Weetabix was founded in 1932 and is the second-biggest cereal brand in the UK, employing about 2,000 people. Its portfolio includes the Weetabix brand, muesli brand Alpen, Barbara’s, Weetos and Ready Brek.
Following the sale, Baring Asia will continue to assist in the growth of Weetabix’s business in China. The firm has also agreed to establish a joint venture with Post and Bright Foods to manage the company’s China operations and continue distributing into the China market. The terms of the agreement have yet to be finalised, according to a source.
During Baring Asia’s two-year ownership, the firm established Weetabix’s distribution network in China which had not existed previously, the source added. The firm also created the organisational structure for the company's China business, hired key professionals, and improved its UK operations in areas such as supply chain management, marketing as well as new product development.
Weetabix doubled its sales in China in 2016, according to the company, but the UK still accounts for 84 percent of its market. Media reports, however, indicate that Weetabix struggled to build significant market share in China as most Chinese consumers prefer a diet of noodles and rice for breakfast.
Commenting on the transaction, Guy Cui, managing director of Baring Asia, said in a statement: “With Chinese consumers increasingly focused on safety and quality, a brand such as Weetabix still has significant potential to grow well beyond the 7,000 points of presence it has today. We believe that the business is in good hands with Post and look forward to continuing with the China expansion in the coming years. We’re also pleased to remain in a partnership with Bright Foods following our very positive and successful experience to date.”
Baring Asia is one of the largest private equity firms in the region and manages over $10 billion of assets. The firm has over 41 portfolio companies active across Asia with a total of 178,000 employees and sales of approximately $35 billion in 2016.
Post Holdings, headquartered in St. Louis, Missouri, is a consumer packaged goods holding company, known for ready-to-eat cereal brands such as Honey Bunches of Oats, Pebbles and Great Grains.
The transaction is expected to be completed in the third quarter of 2017.
Ropes & Gray and Linklaters acted for Baring Asia and Bright Foods, while Baker McKenzie advised Post Holdings.