Lion dishes up $1.9bn Weetabix partial exit

In the latest example of cross-border investment, London-based Lion has sold a controlling stake in UK-based Weetabix to a Chinese state-run enterprise.

US- and Europe-focused private equity firm Lion Capital is partially exiting its eight-year-old investment in cereal company Weetabix with a £1.2 billion (€1.47 billion; $1.9 billion) sale to Chinese state-owned foods group Bright Food.

A 40 percent stake will be retained by company management and Lion, which originally took the company private in 2004 for £642 million when it was still the European affiliate of Hicks Muse Tate & Furst. 

Lion described the Bright Food transaction as “landmark”. The deal is still subject to regulatory and government approvals in China and certain anti-trust approvals. However, if it goes through as expected during the second half of this year, it will be the largest overseas acquisition by a China-based company in the food and beverage sector, according to the firm.

Weetabix is a UK-based cereal producer, which exports to over 80 countries. Lion acquired the business in 2004 as its first ever investment and now plans to expand its operations into China.

Lyndon Lea, partner at Lion Capital, said in a statement: “We are excited to continue our journey with the Weetabix brand, which has been an enormously successful investment, as we extend the business into China in partnership with Bright Food.”

Bright Food chairman Zongnan Wang added: “We are excited by the many growth opportunities for the business, especially in international markets, and Asia in particular. With Bright Food’s strong resources and our expertise in both the Chinese and broader international markets, we are excellently placed to develop the Weetabix business.”

Bright Food has a history of investing in private equity-owned food businesses located overseas. In August, Bright Food bought 75 percent of Manassen Foods from Australia-based CHAMP Private Equity, in a deal worth more than A$500 million (€392 million; $515 million) including debt.

The overseas acquisition also represents an example of the cross-border investment encouraged by the Chinese government, a trend that many industry sources believe is only in the beginning stages.