Margin Call: Private equity’s Arnott’s bite fails to raise hackles

Concern about foreign direct investment from the Americans appears to have declined. Picture: Supplied

Scott Morrison’s “Quiet Australians” for now seem to be shrugging their shoulders about the circa $3 billion sale of Tim Tam and Mint Slice maker Arnott’s to international private equity behemoth KKR.

Apparently concern about foreign direct investment from the Americans — even when its parent is registered in the corporate tax friendly island nation of Singapore, as appears to be the case in the KKR arrangement — is so nineties.

It was a different reaction back in 1997 when the New York-listed Campbells Soup Company bought the then Australian icon back when John Howard was PM.

Private equiteers David Lang and Gareth Woodbridge, from KKR’s Sydney office, have been flat out in recent days preparing for the American-headquartered firm’s acquisition of Arnott’s from Campbells Soup Company.

The pair have emerged as key directors of a range of interconnected corporate vehicles that form the architecture for the deal, all of which culminate in a freshly registered Singaporean head company Asia Snacking II Pte Ltd.

Arnott’s Biscuits and its parent company Arnott’s are registered in Australia and owned by Campbells.

Lang — who is a director of the now KKR-controlled MYOB, private equity’s favourite accounting software company — and Woodbridge have established four new Aussie vehicles to hold the maker of Tiny Teddy, Iced VoVo and Monte Carlo biscuits: Snacking Investments HoldCo, Snacking Investments MezzCo, Snacking Investments MidCo and Snacking Investments BidCo.

That delicious quartet all ultimately feed into the new parent in Singapore, a business friendly island with a corporate tax rate of 17 per cent.

In May former prime minister Malcolm Turnbull joined KKR as a senior global adviser. KKR would not comment on whether Turnbull lifted so much as a Ginger Nut in the biscuit deal.

The deal will be another feather in the cap of former Morgan Stanely and Merrill Lynch banker Lang.

Life as an Australian-based private equity player is working out well for him, as demonstrated by the $14 million luxury North Bondi cliff top home he bought late last year, setting a new local record.

He’ll hope the biscuit deal will help him eventually pay off his HSBC mortgage on the beach pad.