REFILE-UPDATE 2-China's Bright Food buys Weetabix

Thu May 3, 2012 1:23pm EDT

* Largest overseas deal by a Chinese food group

* Weetabix will bring healthy mix to Bright Food

* Deal value Weetabix group at 1.2 billion pounds

By Samuel Shen and David Jones

SHANGHAI/LONDON, May 3 (Reuters) - China's Bright Food will take control of breakfast cereal maker Weetabix, beloved by generations of British children, in the biggest foreign acquisition by a Chinese food group.

State-owned Bright Food has agreed to buy a 60 percent stake in a deal which puts a value of 1.2 billion pounds ($1.94 billion), including debt, on the private-equity owned company that coined the slogan "Have you had your Weetabix?"

The Shanghai-based group has been on the acquisition trail, seeking to raise its profile and cater for its rapidly growing home market. Weetabix is its second foreign purchase in a year and its first in Europe after other deals fell through.

Eighty-year-old Weetabix is Britain's second biggest maker of breakfast cereals and cereal bars after Kellogg.

Its brands include Alpen muesli and Ready Break as well as Weetabix, which lays claim to being Britain's No. 1 breakfast cereal for under-5s and is made from wheat grown within 50 miles (80 km) of its base in southern England.

"As China's leading food group, we are pleased to become the controlling shareholder of Weetabix," Bright Food chairman Wang Zhongnan said in a statement on Thursday. "Weetabix has an excellent product portfolio, including leading British cereal brand Weetabix and other category-leading brands."

Private equity owners Lion Capital and Weetabix management will keep a 40 percent stake.

The quintessentially British breakfast cereal group was founded in 1932 by the secretive George family and soon producing its iconic bricks of wheat. It was bought by a private equity firm in 2004.

HEALTHY EATING

Bright Food now sees a big opportunity for Weetabix in China, where breakfast is a very important meal and there is a trend towards healthy eating.

The group, which makes "White Rabbit" candy, bought majority stakes in Australia's Manassen Foods and New Zealand's Synlait Milk over the past two years.

Analysts expected more deals would now follow in Europe after its earlier failed attempts to buy Britain's private-equity owned United Biscuits, the McVitie's and Hula Hoops group, and a stake in French yoghurt firm Yoplait.

"This is a trend," said Ghislain de Mareuil, a Paris-based lawyer at De Pardieu Brocas Maffei. "In China, you have to set an example, and then others follow. What Bright Food has done will definitely set a trend for other Chinese food companies the way we have seen in the automotive industry."

Weetabix had sales of over 460 million pounds in 2011 and employs around 1,800 people.

It has around 7 percent of the British breakfast cereal market. As well as Kellogg, it competes with the Swiss based joint venture Cereal Partners between Nestle and General Mills whose brands include Shreddies and Cheerios.

Weetabix was sold by the George family for 642 million pounds in 2004 to U.S. private equity firm Hicks Muse Tate & Furst, which later restructured and spun out its European buyout arm to form Lion Capital.

The deal is expected to close in the second half of 2012 and is subject to Chinese regulatory approval.

Banking group Rothschild and lawyers Linklaters advised Bright Foods on the transaction.

Bright Food has four subsidiaries listed on the Shanghai Stock Exchange: Shanghai Jinfeng Wine Co, Shanghai Haibo Co, Shanghai Maling Aquarius Co and Bright Dairy & Food Co.