Lion's £1.2bn partial sale of Weetabix completes

Kimberly Romaine
05 November 2012

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Bright Food's purchase of a 60% stake in Weetabix from Lion Capital is the largest overseas transaction ever by a Chinese company in the food and beverage sector.

Lion's remaining 40% is expected to be sold to Bright Food in two or three years' time, generating nearly 5x money for the GP.

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

The sale is one of an increasing number of private equity-backed businesses being sold to buyers from developing markets.

Weetabix had 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.

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.

Lion (then Hicks Muse Tate & 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.

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.