New Arnott’s owner tight-lipped on plans for factories, product range
The US investment company that has bought Arnott’s wants to grow the Aussie biscuit maker but hasn’t ruled out selling its factories or shifting production offshore.
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The US private equity group that has bought Arnott’s says it wants to grow the business but has not ruled out selling its factories, streamlining its range or shifting production offshore.
KKR & Co, formerly known as Kohlberg Kravis Roberts, yesterday formalised its deal to buy the Aussie biscuit maker behind brands such as Tim Tam, Shapes and Kingston.
A pioneer of the global private equity industry, it will buy 154-year-old Arnott’s from US food titan Campbell Soup Company for $US2.2 billion ($3.2 billion).
KKR will also pick up a regional portfolio of Campbell’s brands spanning soup, stock, juice and ready meals that are sold in Australia, New Zealand, Indonesia, Malaysia, Singapore, Hong Kong and Japan.
It will produce the products under a licence deal that spans 15 years and has the option to extend it for another 10 years.
Products include Campbell’s, Swanson, V8, Prego, Chunky and Campbell’s Real Stock.
The deal hands KKR manufacturing sites in Sydney, Brisbane and Adelaide as well as in Indonesia and Malaysia.
Arnott’s, which is headquartered in Sydney, employs 2400 people.
It closed its factory in Melbourne early last decade.
KKR member David Lang said the deal handed the firm a unique portfolio of brands known and loved by consumers in Australia and around the world.
“We are privileged and excited to have the opportunity to invest in and grow Arnott’s as an independent business in Australia, in addition to further developing Campbell’s trusted brands across the broader Asian market,” he said in a statement.
“This is a milestone investment for KKR, and we look forward to working closely with the Campbell International management team to seek out new and exciting opportunities.”
Separately, KKR declined to answer questions from Business Daily about its plans for the business, including whether it would sell, then lease back, its Australian factories, streamline the biscuit portfolio or shift production offshore.
Sale and leaseback deals can provide a short-term cash boost but saddle companies with higher long-term costs.
The sale marks the end of an era for Arnott’s, which has been owned outright by Campbell’s since 1997.
Campbell’s is selling assets across the globe to cut its debt load after a series of takeovers in the past decade failed to deliver value for shareholders.
MORE: PETER TAYLOR EXPLAINS THE DEAL
ARNOTT’S REAVEALS AUSTRALIA’S FAVOURITE
Arnott’s was founded in Newcastle by Scottish migrant William Arnott in 1865. It was a family-owned business and then a listed company before Campbell’s bought it.
Its roots go back to Port Melbourne, where the Swallow & Ariell biscuit company was launched in 1854.
Swallow was one of many biscuit companies that was bought up and ultimately ended up in the Arnott’s portfolio as part of a consolidation drive.
Goldman Sachs, Centerview Partners, and King & Wood Mallesons were among those who advised Campbell’s on the deal.
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