Global food and beverage giant Kraft Heinz is understood to have been exploring a sale of its Australian and New Zealand operations that some estimate could be worth about $1bn.
Talk in the market has surfaced that executives at the world’s fifth-largest food and beverage company were weighing a move to exit the local market.
The North American group with $US25bn ($38bn) of annual sales is said to have offered little insight on its plans of late, but some market experts take the view that it is a matter of when and not if it makes a move.
It will wait until the market conditions become more conducive to dealmaking, with international travel bans frustrating global merger and acquisition activity.
Prospective buyers are left wondering whether only parts of the operation will be placed on offer, or whether Kraft Heinz will exit the Australia and New Zealand operation in its entirety.
It is thought its Trans-Tasman operations may generate about $1bn of annual revenue and that its New Zealand Watties business would be the most lucrative, while Golden Circle in Australia is thought to be an underperformer.
Should it divest the assets, it would continue the global trend of major global companies in the consumer space selling out of regional markets and redeploying the proceeds closer to home, which in some cases has been triggered by shareholder activism.
Kraft Heinz, which is backed by Warren Buffett, has not yet appointed an investment bank, but some believe Goldman Sachs would be well placed, given its US base and its track record executing similar deals for other American companies.
Asset sales elsewhere in the world were also on the agenda last year by Kraft Heinz, but plans were halted.
Goldman advised the Campbell Soup Co on its sale of Arnott’s Biscuits to Kohlberg Kravis Roberts last year for $US2.2bn. It has also worked on a sale of the Australian and New Zealand operations of glass bottle and container manufacturer Owens Illinois, which came close to selling the business to Visy Industries before the onset of the COVID-19 pandemic.
The thinking is that following the 2015 merger between Heinz by Kraft, integrating the two brands in the Australian market has not been as successful as hoped. The market dynamics are also changing, with more imported products and different consumer consumption patterns and behaviour.
In 2018, Kraft Heinz posted a $US10.2bn loss and took a $US15.4bn writedown of its Kraft and Oscar Meyer brands. Net income was $US1.9bn for the last financial year.
Consolidation has been happening among global food giants for some time, with Kraft Heinz making a $US143bn takeover approach for British-Dutch multinational Unilever in 2019. That bid was rebuffed.
Unilever has attempted to sell Australian operations, at one stage exploring a sale of its Continental Soup business.
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