A HEALTH food company today bought Poundbury-based Dorset Cereals in a multi-million pound deal.

Wellness Foods Limited, a health food group, purchased the award-winning firm in a deal worth a reported £50 million by industry sources.

Horse racing tycoons JP McManus and John Magnier, famous for their attempts to buy Manchester United, are thought to be investors in the private equity firm Lydian Capital behind Wellness Foods.

Dorset Cereals chief executive Peter Farquhar was quick to allay any fears that staff might have for the future of the firm.

He said: "We've changed our shirt sponsor but we haven't changed the team.

"The important thing is that it will be business as usual and as far as we are concerned we are staying in Poundbury."

Mr Farquhar added that himself and the rest of the senior management team - Nigel Horsman and Patrick Horton - were staying at the company.

In December last year Dorset Cereals dismissed rumours that the business was up for sale as flattering but untrue. Mr Farquhar said this was the case at the time but negotiations were generated by the speculation.

"It flushed out a lot of interest in the company," he added.

Dorset Cereals employs more than 100 staff in its Poundbury factory, producing a range of muesli, porridge and cereal bars.

The Financial Times placed the sale at £50 million before an official announcement was due to be made today.

Langholm Capital funded a management buy-in of Dorset Cereals in April 2005.

Wellness Foods is led by Philip O'Connor and John Toomey, each of whom has worked for more than 20 years in the food industry.

Chief executive Mr O'Connor said: "The team at Dorset Cereals led by Peter Farquhar has developed a highly successful business focused on premium, natural foods that taste great.

"We share their vision of delivering honest, tasty and real healthy food.

"We are delighted that the entire senior management team will be staying with the business."

Senior management at Dorset Cereals will continue to be significant shareholders in the business.

Wellness says it is highly supportive' of management's plans to grow the business.

Mr Farquhar said: "Dorset Cereals is a perfect fit for Wellness Foods and Dorset Cereals will obtain many benefits from being part of Wellness Foods.

"This is a great transaction for consumers, customers and employees of Dorset Cereals and we are all very excited about taking Dorset Cereals to the next stage in its development."

When it made its purchase Langholm Capital in April 2005 announced plans to take the name of Dorset Cereals across the world and since then business has boomed.

The company was rebranded by Langholm and a new packaging plant was built to market its products in new packaging.

Langholm Capital is thought to have invested around £3 million in the brand, with the new extension at the plant doubling space in the factory.

Mr Farquhar said at that time the expansion was crucial because the business was growing so fast due to widespread interest in healthy eating and demand for natural food products.

Sales in the UK at such stores as Tesco, Waitrose, Sainsburys and independent shops are thought to have increased annually to almost £30 million from £4 million only three years ago. The company, which was started in 1989 by entrepreneur Terry Crabb, exports to 60 countries.

It was ranked as one of the top 150 companies in England when it scooped the Queen's Award for International Trade in 2006.

Between 2003 and 2005 exports grew by a 96 per cent, making Dorset Cereals the highest performing cereal producer in the UK.

Wellness foods has added Dorset Cereals to its range of products after buying Rowse Honey, organic juice company Grove Fresh and the snacks brand Fruit Bowl.

The Wellness Foods vision for Dorset Cereals involves continued investment in the brand, facilities and people to meet its future growth expectations.

The Wellness Foods businesses, including Dorset Cereals, projects sales in excess of £220m this year and by 2011 has a vision to build a business with sales of £500m.