Shanghai’s Bright Food (Shanghai: 600597), a maker of popular milk and biscuit brands, is moving forward in its recent global acquisition spree , this time eating up a controlling share of well-known British cereal maker Weetabix in its march to become China’s first major consumer brand. The deal, which will see Bright buy 60 percent of Weetabix from a private equity firm, is part of an interesting but also risky strategy that the Shanghai-based company hopes could eventually propel it into the ranks of major names like Kraft Foods (NYSE: KFT) and Procter & Gamble (NYSE: PG). This particular deal is Bright’s biggest to date, valuing Weetabix, the maker of Alpen and Ready Brek breakfast cereals, at about $1.9 billion, implying Bright will be paying more than $1 billion for its stake. (English article) The purchase follows Bright’s acquisition last year of 75 percent of Australia’s Manassen Foods for $382 million, and its 2010 purchase of New Zealand milk producer Synlait Milk for $58 million. (previous post) The company also says it is in talks to buy a French wine maker, which should produce another deal in the next 2 months. I should applaud Bright for being one of the few Chinese firms that can actually close this kind of deal, as many Chinese firms love to talk about their global acquisition strategies but then often fail to sign many deals due to their lack of experience. That said, Bright’s particular acquisition strategy looks good for its focus, though also a bit risky because of its diverse geography and big scale relative to Bright’s own size. In terms of focus, I like the fact that Bright seems to be concentrating on well-known western brands in businesses close to its own expertise, with all of its acquisitions in the related cereals and beverages areas. But from a scale perspective, these acquisitions — which could cost nearly $2 billion combined — are quite large for a company that itself only earned $12.2 billion in revenue last year. The diverse geography, with 2 acquisitions in Europe and 2 in Australia and New Zealand, could also be a challenge for a company that has little or no experience operating abroad. Still, I do like Bright in general as it seems like a well-run company. Accordingly, I’ll be watching closely to see how well it manages these acquisitions. If it does well, which looks like a 50-50 bet, the future could indeed look bright for this company, which could achieve its aim of becoming a major global food brand in the next 5-10 years.
Bottom line: Bright Food is embarking on a risky but potentially rewarding global acquisition strategy, with a 50-50 chance of becoming China’s first major consumer brand.
Related postings 相关文章:
◙ Gree, Bright Food, Fosun in New Global Moves 格力电器、光明食品和复星集团全球新动向
◙ Bright Finally Finds Tasty M&A in Australia’s Manassen 光明食品终於觅得“佳偶”
◙ Nestle, Bright Food Cross-Border M&A Look Sweet 雀巢、光明食品跨境并购前景看好
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