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Summary
- Freedom Foods Group Limited has hived off its Snacks and Cereals division for around $20 million to private equity giant KKR-backed Arnott’s Group
- The deal is seen as an attempt to simplify Freedom Foods business and product variety in order to enhance productivity.
- Freedom Foods will get net cash earnings of only $11 million after deducting transaction and other charges once the deal will be completed
In a move to boost profitability, leading Australia-based food & beverage group Freedom Foods Group Limited (ASX:FNP) is hiving off its Snacks and Cereals division for around $20 million to private equity giant KKR-backed Arnott’s Group.
Freedom Foods said the deal with Arnott would see the sale of some assets and liabilities of the company’s snacks and cereals division. However, on the completion of the deal, the food & beverage group will get net cash of only $11 million after deducting charges related to the transaction and equipment contracts.
Net assets of about $20 million are included in the sale, and the company is not expecting any further material loss.
The deal is seen as an attempt to simplify Freedom Foods business and product variety in order to boost productivity. The Cereals and Snacks division produces Messy Monkeys and Heritage Mill brands.
Commenting on the deal, George Zoghbi, CEO at Arnott’s Group, said the deal would boost the company’s strategy of foraying into the product categories and explore innovation. Plans are afoot to add three Australian manufacturing facilities to the company’s already well-invested local supply chain.
He added that the company’s local manufacturing would expand across eastern Australia from Virginia in Queensland, Darlington Point, Huntingwood and Leeton in NSW to Shepparton and Dandenong in Victoria and Marleston in South Australia.
The transaction, which requires no regulatory or financing nods, is expected to be completed on 1 March.
The deal will include manufacturing units in Leeton and Darlington Point in NSW and in Dandenong, and all related brands, which includes Freedom Foods, Arnold’s Farm and Barley+. However, brand Crankt Protein will remain a part of the Freedom Foods product portfolio.
