St. Louis, Missouri-based Post Holdings Inc. (NYSE: POST), a consumer packaged goods holding company, said it agreed to acquire Weetabix Ltd from Shanghai based state-owned enterprise Bright Food Group and an investment fund advised by Baring Private Equity Asia, for £1.4 billion ($1.78 billion) on a cash free, debt free basis.
Weetabix is a leading UK-based packaged food company that primarily produces ready-to-eat (RTE) cereal products spanning branded and private label. Founded in 1932, Weetabix holds the number two overall position in the UK RTE cereal category. Its portfolio includes the iconic Weetabix brand, which holds the number one brand position in the UK RTE cereal category, as well as Alpen, the number one muesli brand in the UK, Barbara’s, Weetos and Ready Brek.
In North America, Weetabix operates a leading natural and organic RTE cereal and snacking platform in both branded and private label, led by the Barbara’s brand and the Puffins sub-brand and serving leading natural and specialty channel and conventional retailers.
Weetabix also has an established and extensive international presence, with operations in Africa through two joint ventures and a distribution export business to over 90 countries. Post has agreed in principle to establish a joint venture with Bright Food Group and an investment fund advised by Baring Private Equity Asia to manage the Weetabix China operations.
“We have long admired Weetabix as a leader in cereal and believe it will be a fantastic strategic fit within Post,” said Rob Vitale, Post’s President and CEO. “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. We are excited about the growth opportunities that this acquisition brings.”
The combination of Post and Weetabix creates a diversified international food company with substantial free cash flow generation, enabling Post to fund growth over the long-term, including international cross-selling opportunities through expansion of Post products in select international markets and further expansion of Weetabix and Barbara’s in North America.
At closing, Giles Turrell, Weetabix’s current CEO, will assume the newly created role of Chairman of Weetabix with responsibility for overseeing the integration of Weetabix into the Post portfolio. Sally Abbott, Weetabix’s Director of Marketing, will become Managing Director of Weetabix UK and Ireland and report to Rob Vitale. The other members of Weetabix’s existing management team will continue to lead the organization.
The deal is expected to be completed in the third quarter of 2017, subject to certain closing conditions, including the expiration of waiting periods under U.S. antitrust laws.
Barclays, Rabobank, Credit Suisse and Nomura are acting as financial advisors to Post.
Weetabix is expected to contribute approximately £120 million of adjusted EBITDA on an annual basis before the realization of cost synergies which Post management expects to be approximately £20 million annually by the third full fiscal year post-closing. The deal is expected to be immediately accretive to Post’s Adjusted EBITDA margins and free cash flow, excluding one-time transaction expenses.
Post Holdings operates in the center-of-the-store, foodservice, food ingredient, private label, refrigerated and active nutrition food categories. Through its Post Consumer Brands business, Post is a leader in the RTE cereal category and offers a broad portfolio that includes recognized brands such as Honey Bunches of Oats, Pebbles, Great Grains, Grape-Nuts, Honeycomb, Frosted Mini Spooners, Golden Puffs, Cinnamon Toasters, Fruity Dyno-Bites, Cocoa Dyno-Bites, Berry Colossal Crunch and Malt-O-Meal hot wheat cereal.
Post’s Michael Foods Group supplies value-added egg products, refrigerated potato products, cheese and other dairy case products and dry pasta products to the foodservice, food ingredient and private label retail channels and markets retail brands including All Whites, Better’n Eggs, Simply Potatoes and Crystal Farms.
Post’s Active Nutrition platform aids consumers in adopting healthier lifestyles through brands such as PowerBar, Premier Protein and Dymatize. Post’s Private Brands Group manufactures private label peanut butter and other nut butters, dried fruits, baking and snacking nuts, cereal and granola.