China's Bright Foods eyes Europe acquisitions

China's Bright Food is on the acquisition trail in Europe, visiting London, Dublin, Brussels and Barcelona, as part of the state-controlled group's drive to double its international presence within the next three years.

Ge Junjie, vice-president of the group that has majority stakes in the UK's Weetabix breakfast cereal and French wine merchant Diva Bordeaux, said Bright Food wanted to secure joint ventures, strategic partnerships and acquisitions.

Bright Food aims for international assets to account for 25 per cent of its total assets in three years' time, from 12 per cent today, he told the Financial Times.

His comments come amid an uptick in overseas acquisitions by Chinese companies to gain access to more advanced technologies and management and to secure a competitive advantage in an increasingly competitive domestic market.

Chinese outbound mergers and acquisitions activity has risen from $1bn in terms of deal volumes a decade ago to $50bn in 2013, according to Deutsche Bank, a year that included Shuanghui International's $4.7bn takeover of US pork producer Smithfield Foods.

Mr Ge, who also spoke at a London School of Economics seminar at the weekend, said expanding globally was a "historic choice" for Chinese companies that would improve their competitiveness and give western companies access to China's 1.3bn population.

"Chinese people eat three meals a day - that's a lot of food required, especially if you include snacks," he said.

Bright Food is one of China's biggest food groups and its third-largest dairy producer by revenues, according to China Confidential, an FT research service.

Mr Ge said the group's principal focus was on four sectors: dairy; sugar and sweeteners; modern agriculture; and spirits and wine.

The company has been in talks with Tnuva about a possible acquisition, with one attraction being the Israeli food manufacturer's modern agricultural methods.

"I [have] met three sugar and sweetener companies headquartered in London, and two investment banks," said Mr Ge. "There are lots of opportunities."

He said Bright Food's acquisition strategy included obtaining access to foreign management know-how - "if we cannot keep the original management team, we won't acquire the company: stability is important."

The company was looking for added value potential, "reasonable valuations" and "manageable risk".

Bright Food in 2010 walked away from acquisition talks with United Biscuits, the British owner of Jaffa cakes and digestive biscuits, blaming its pension liabilities.

But it could re-emerge as a potential acquirer when private equity owners PAI and Blackstone seek an exit, expected later this year.

Mr Ge said Bright Food would also seek takeover targets in Asia, after already making dairy acquisitions in New Zealand and Australia.

Asked about the cultural challenge of converting Chinese consumers to eating cold milk with cereal for breakfast - regarded as unhealthy for the stomach - Mr Ge said the Weetabix acquisition had been premised on Chinese consumer demand for health and nutrition.

"Weetabix is not only a breakfast cereal, it is also about selling a lifestyle and it has nutrition bars, biscuits and other formats," he said, adding that Bright Food was "still in the process" of integrating Weetabix and did not yet have a firm timetable for an international public offering of the business.

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