Crunch time at Arnott’s as KKR ticks Aussie biscuit maker off shopping list

It’s based in New York, but the company about to take control of famous biscuit maker Arnott’s is no stranger to Aussie business. So just who is KKR, and what else does it own down under?

One of the world’s biggest private equity houses is poised to take control of famous Australian biscuit maker Arnott’s as the hammer finally falls to end a long-running auction.

New York-based KKR & Co has seen off a throng of rival bidders and will formally be named the new owner of Arnott’s as soon as tomorrow, sources say.

It will be the first change of control in more than 20 years at Arnott’s, which makes popular brands including Tim Tam, Shapes and Kingston.

In a statement, the biscuit maker said it had not been sold, and “the process to divest Arnott’s and the rest of our international operations is ongoing”.

Tim Tam and other Arnott’s brands are about to join the KKR pantry.

But KKR said in a separate statement, cited by newswire Reuters, that its bid had been accepted by Arnott’s US parent, Campbell Soup Company.

Campbell’s last night reached broad terms for a deal with KKR and is tonight preparing to ink the sale contract, Business Daily believes.

The soup maker has been working with investment bankers from Goldman Sachs to find a buyer for its broader international business, which includes the biscuit company.

According to market speculation, KKR has agreed to pay about $US2.2 billion ($3.15 billion) for the division.

I’ll take that, thanks! KKR & Co has ticked Arnott’s off its shopping list.

It would also secure Australian rights to Campbell’s-branded products including soups and stocks, and other businesses in the international portfolio.

Arnott’s accounts for more than two thirds of revenue at the international division.

Private equity houses typically buy into other companies, restructure them or invest in an attempt to grow the businesses, and sell out several years later.

WHO IS KKR?

KKR, previously known as Kohlberg Kravis Roberts & Co, ranks among the world’s three biggest private equity companies. As of March 31, it had $US200 billion in assets under management.

It is already a major player in Australia, where it owns accounting software company MYOB and, as part of a consortium, Latitude Financial Services, the company formerly known as GE Money.

Former Australia Post managing director Ahmed Fahour runs Latitude Financial Services, which is part owned by a consortium of investors including KKR. Picture: Jane Dempster.

Among its other investments are Sydney-based cosmetic services chain Laser Clinics, and Australian Venue Co.

That business owns pubs across all the state capitals, including the Imperial Hotel in Bourke St, Melbourne, and The Duke of Wellington, in Flinders St.

KKR also owns non-bank lender Pepper, a sponsor of the St Kilda Football Club, and is reportedly planning a float of that business.

It was previously a major investor in Channel 7 owner Seven West Media, and earlier this year hired former prime minister Malcolm Turnbull to serve as a “global senior adviser”.

Campbell’s took outright control of Arnott’s in 1997 after buying into the biscuit company the previous decade.

Last year, it announced plans to sell a suite of assets as part of a drive to cut its debt.

Former prime minister Malcolm Turnbull is now on the books at KKR.

Other contenders for Arnott’s had included another private equity house, Sydney-based Pacific Equity Partners, which owns Four’N Twenty parent Patties Foods and previously owned Peters Ice Cream.

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Italian confectioner Ferrero and US-based Mondelez, the owner of Cadbury, also ran the rule over the biscuit maker.

Arnott’s has factories in Sydney, Brisbane and Adelaide. It closed its Melbourne factory early last decade.

Analysts had suggested Mondelez might have struggled to win approval for an Arnott’s buyout from the competition watchdog, the Australian Competition and Consumer Commission.