US cereal producer Post Holdings has recorded sales of $1.27 billion in the third quarter of its fiscal year, in a three months characterised by its acquisition of Weetabix.
The company agreed a $1.8 billion deal to acquire the British maker of Weetabix and Alpen cereals, following reports in January that majority owner Bright Foods would sell up. The Weetabix deal was tied up in July.
As well as third-quarter sales of $1.27 billion – an increase of 2.1% on the same quarter last year – Post delivered operating profit 29% higher at $190.5 million.
The company has upgraded its forecast for adjusted pre-tax earnings for the year to between $975 million and $990 million, including Weetabix.
Post agreed a deal to acquire Weetabix in April from majority owner Bright Food and minority owner Baring Private Equity Asia. China’s Bright Food bought a 60% stake in the company in 2012 in a deal that valued the business at £1.2 billion, but had failed to make the headway into the Chinese market that it intended.
As well as its flagship range of wheat biscuits, which are the second most popular breakfast cereal in the UK, Weetabix also produces the Ready Brek and Alpen brands.
The business turned over almost £350 million in 2015, but falling pre-tax profits raised concerns about the company’s ability to meet its target sale price. Indeed, the $1.76 billion that Post Holdings will pay for Weetabix is slightly lower than the £1.5 billion valuation reported in January.
Faltering performance for Weetabix in China had prompted Bright Food to cash in. The country’s uptake of the cereal had been slower than the company had hoped for with Chinese consumers still preferring hot, rice-based breakfasts, the BBC reported.
Following the acquisition, Post CEO Rob Vitale said he expected to see ‘growth opportunities’ from the merger.
“We have long admired Weetabix as a leader in cereal and believe it will be a fantastic strategic fit within Post,” Vitale said.
He added that the acquisition “combines together two category leaders [and] continues our strategy of strengthening our portfolio in stable categories and diversifying into new markets”.
The deal was concluded on 3 July.
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