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China’s Bright Food has reportedly hired investment bank Goldman Sachs to sell UK-based breakfast cereal firm Weetabix four years after purchasing the brand.
Reuters writes that the sale of Bright Food’s 60% steak in Weetabix would value the company at around £1bn.
State-owned Bright Food Group bought its stake in Weetabix from private equity firm Lion Capital in 2012 in a deal that valued the firm at £1.2bn at the time. Baring Private Equity Asia bough the remainder of Lion Capital’s stake in 2015.
Retuers said that sale comes after Bright Food has struggled to crack the Chinese market, where hot breakfasts continue to dominate.
The majority of Weetabix sales still come from its domestic market, where breakfast cereals have struggled to grow amid a declining market in recent years.
In October The Grocer revealed that the brand’s sales fell back once more last year as it battled its “most difficult [trading] period for a generation”.
Globally, Weetabix’s sales, including joint ventures and its North American business, slipped 1.3% to £432.8m in the year to 2 January 2016. This was driven by a 2.4% revenue fall in its UK business to £350.8m.
EU sales rose 1.9% to £79.8m and, according to the accounts of its parent company Latimer Newco 2, North American sales rose by 2% to £79.8m.
Sales derived in locations other than the UK, EU and North America remained relatively modest despite its efforts to grow sales in Asia, rising 2.1% to just £16.7m during the year.
Morning update
The UK’s new relationship with the European Union must meet the needs of every sector of the economy to be a success, as the consequences of leaving any behind could have knock-on effects for others, according to a new report from the CBI.
The report follows the CBI’s largest consultation of members since before the EU referendum and looks at the opportunities, concerns and questions that 18 sectors of the UK economy face ahead of EU negotiations in 2017 - on the ease of doing business, regulation, and access to talent.
In Making a Success of Brexit, the CBI calls on the Government to consider the complexity of the modern economy where no business operates in isolation.
For the food and drink sector, the CBI writes that much of the current regulation of the industry is from the EU, and the sector is looking for stability and certainty. Mutual recognition of regulations enables easier trade in food and drink, which can be complex, it says, and that non-graduate EU workers play a vital part in the industry and as such reassurances and continued access to workers is important.
Elsewhere, Dairy Crest (DCG) has announced a research partnership with Danisco Animal Nutrition, part of DuPont’s Industrial Biosciences business this morning.
Under the partnership agreement, Danisco will support product development and trials, commencing in January 2017 to ascertain the efficacy of Dairy Crest’s galacto-oligosaccharide “GOS” for use in poultry and swine.
Dairy Crest has been producing GOS, a prebiotic used in infant formula, at its Davidstow plant since March and has been exploring other market opportunities for GOS.
At its interim results announcement in November, Dairy Crest showed the positive impact GOS had in academic research trials on the growth of chickens and pigs. GOS works by stimulating the growth of beneficial bacteria in the gut to help animal development.
Dairy Crest’s Chief Executive, Mark Allen, commented: “This marks an important step in the development of GOS for uses beyond Infant Formula. I believe the potential opportunities for GOS in the animal feed market are exciting. I am therefore delighted to be working with DuPont, a company which has enormous experience in developing innovative products for animal feed.”
Sausage skin manufacturer Devro (DVO) has announced Malcolm Swift will join its board as a non-exec director at its AGM in April. Swift is president of the global industrial division of McCormick & Co and president of McCormick International, comprising all retail and industrial operations outside the Americas.
On the markets this morning, the FTSE 100 is up another 0.1% this morning to 7,053.6pts as the mini pre-Christmas share price surge continues.
Risers so far include Applegreen (APGN), up 2.5% to 370p, Real Good Food (RGD), up 2.1% to 35.2p, Greencore (GNC), up 1.8% to 242.1p, Coca-Cola HBC (CCH), up 1.7% to 1,692p and Premier Foods (PFD), up 1.7% to 44.8p.
Fallers include Hotel Chocolat (HOTC), down 2.3% to 281.4p, PureCircle (PURE), down 2.1% to 236p, McColl’s (MCLS), down 1.1% to 180p and McBride (MCB), down 1% to 180.9p.
Diary Crest is down 0.2% to 603p after this morning’s partnership announcement.
Yesterday in the City
The market continued its strong end to the year as the FTSE 10 rose another 0.4% yesterday to end trading at 7,044pts.
A number of retailers were amongst the better performers in the grocery sector, led by Ocado (OCDO) which rose 1.3% to 256.2p, Marks & Spencer (MKS), up 1.2% to 357p and Tesco (TSCO), up 1.2% to 204.7p.
McColl’s, which finally received regulatory approval for its purchase of 298 Co-op convenience stores yesterday, rose 0.8% on the news to 182p.
Other risers included Conviviality (CVR), up 2.4% to 216.5p, Devro (DVO), up 2.1% to 174.3p and Glanbia (GLB), up 1.5% to €15.63.
There were few fallers amongst the major listed grocery firms, but Dairy Crest (DCG), was down 1.2% to 604p, SSP Group (SSPG) fell 0.9% to 378p and Associated British Foods (ABF) dropped 0.9% to 2,681p.
Also edging backwards yesterday were Premier Foods (PFD), down 1.7% to 44p, Majestic Wine (WINE), down 1.5% to 299.5p and Just Eat (JE), down 1.4% to 567.5p.
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