Lion to make 5x money on Weetabix

Kimberly Romaine
03 May 2012

Tweet
Facebook
LinkedIn
Google plus
Send to

Lion Capital has sold 60% of UK cereal business Weetabix to Chinese food group Bright Food, in a deal that values the company at ТЃ1.2bn.

Once the remaining stake has been sold to Bright Food, expected in two to three years, Lion should make near 5x its money, according to a source close to the deal.

The asset has been on the block since the middle of last year, and the sale comes after Weetabix restructured around £900m of its debts. It required 80% acceptance to extend its loans but managed to get nearer 90% as a result of paying down some debt with cash and sweetening the deal with margin uplift.

Lion is said to have already generated a 3x return on its initial investment through several dividend payments; when the business fully is exited this should rise to nearly 5x.

At the time of the take-private, Weetabix reported turnover of £361.6m and pre-tax profits of £44.4m. By 2010, the business reported a gross profit of £20.4m from revenues of £449m. Weetabix employed 1,700 people at the time of the initial buyout and 1,800 today.

Previous funding
Lion (then Hicks Muse Tate and Furst) took Weetabix private in 2004 in a deal that valued the business at £642m. The firm paid £268.75 per ordinary share and £53.75 for each ordinary A share.

Company
Weetabix is a Kettering-based breakfast cereal manufacturer with brands that include Alpen, Weetabix, Weetos and Ready Brek. It exports to 80 countries worldwide and employs 1,800 people. The company was founded in 1932 and has been run by the George family since before World War II. The largest single shareholder prior to Lion's acquisition in 2002 was Gardner Russo, a US wealth management company which owned a 14.5% stake. The George family owned a combined 20% of the business.

Advisers
Equity – Weil Gotshal & Manges (Legal).
Acquirer – Rothschild (Corporate finance); Linklaters (Legal).