What does future hold for favourite biscuit brands after sale of Arnott’s?

Beloved Aussie biscuit maker Arnott’s is being sold to a New York-based company, with the multi-billion-dollar deal set to fuel fears about job cuts and the future of some of its popular brands.

The famous Aussie biscuit maker behind brands including Tim Tam, Shapes and Kingston is poised to change hands in a multi-billion-dollar deal.

Following a drawn-out auction process, Arnott’s US owner, Campbell Soup Company, has all-but agreed to sell the Australian business.

In a statement this morning, Arnott’s said it “has not been sold”.

“The process to divest Arnott’s and the rest of our international operations is ongoing. We do not comment on rumour and speculation,” the biscuit maker said.

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But other sources have told the Herald Sun a high-profile New York-based private equity house, Kohlberg Kravis Roberts & Co, is buying the company.

It is believed a contract will be signed in coming days, after which Campbell’s will make a formal announcement.

The price is not yet clear, but according to market speculation, KKR & Co has broadly agreed to fork out $US2.2 billion ($3.1 billion) for Campbell’s international division.

That division includes Arnott’s, which also makes Salada, Mint Slice, Scotch Finger and a long list of other market-leading biscuit brands.

Arnott’s is the name behind many of Australia’s favourite biscuits.

Assuming the deal is formalised, KKR will have beaten out another private equity house, Sydney-based Pacific Equity Partners, which owns Four’N Twenty parent Patties Foods and previously owned Peters Ice Cream.

The Arnott’s deal will fuel fears the biscuit maker will soon be the target of deep cost cuts, putting at risk jobs and some of the company’s long-established brands.

Analysts have said private equity owners will likely sell Arnott’s factories out from underneath the biscuit maker.

They would strike “leaseback” deals, meaning Arnott’s could continue to use the factories but forever pay rent.

That has prompted concern that in future, the biscuit maker might close its plants and shift production offshore.

The private equity houses would likely score a bumper payout from selling the factories.

Private equity companies typically only invest in businesses for several years, and try to make a quick profit then move on.

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

The pending 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 to cut its debt after a series of takeovers the past decade failed to deliver suitable returns.

The company announced last year that it would sell its international business. Investment bankers from Goldman Sachs have been advising Campbell’s on the sale.

Among those who ran the rule over the biscuit maker were Mondelez, the US company that owns Cadbury.

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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.

Italian food heavyweight Ferrero, the owner of confectionary brands and the Nutella spread, also considered a buyout of the biscuit company.

Arnott’s, which was founded in Newcastle in 1865, was a family-owned business and then a listed company before Campbell’s bought it.

Its roots go back further, to Port Melbourne, where the Swallow & Ariell biscuit company was launched in 1854.

Swallow was one of many biscuit companies that joined forces mid last century in a consolidation drive led by Arnott’s.