View all newsletters
Receive our newsletter - data, insights and analysis delivered to you
  1. News
December 17, 2020

Freedom Foods confirms sale of cereal, snacks division to KKR-backed Arnott’s

Australia's Freedom Foods Group has confirmed it has sold its cereal and snacks division to a local peer owned by a US private-equity firm.

By Leonie Barrie

Australia’s Freedom Foods Group has confirmed it has sold its cereal and snacks division to local peer The Arnott’s Group, which is owned by US private-equity firm KKR, for AUD20m (US$15.2m).

Free Report
img

What’s the forecast for the food and grocery industry?

The food and grocery sector thrived during the pandemic, largely due to the shutdown of the food service industry and the sector’s subsequent necessity, panic-induced bulk purchasing, and spending more time at home. The market has grown as a result of inflation. Consumer unwillingness to go out and socialize, and the reopening of several hospitality facilities, helped maintain the demand for groceries, particularly online, in 2021. As consumer behavior changes, we consume more food and drink at home, and inflation increases basket sizes. GlobalData predicts that the sector will continue to hold a higher share than had been predicted prior to the pandemic. This is true despite the fact that the food and grocery sector's share of overall retail will decline from its peak in 2020. This report will discuss market forecasts and key themes in the global food & grocery industry in 2022 and beyond. It covers:
  • Market drivers and inhibitors
  • Five-year forecasts and the impact of COVID-19
  • The performance of the online channel versus offline
  • Major trends in the market including rapid delivery, ambient retailing, supply chain disruption, and inflation
Assess developments within this sector to help your business thrive in 2022 and beyond.
by GlobalData
Enter your details here to receive your free Report.

With the Freedom Foods’ brand name will be retained by Arnott’s post-deal, Freedom Foods Group said it now plans to change its corporate name.

Reports in the Australian media, covered by just-food yesterday, had predicted the deal ahead of Freedom Foods Group’ confirmatory announcement today (17 December).

In a filing with the Australian Securities Exchange (ASX), the company said the cereal and snacks division, which makes the Messy Monkeys and Arnold’s Farm brands, had been sold “as part of the ongoing programme to simplify the company’s business structure and product range, improve profitability and prioritise growth opportunities”.

Freedom Foods Group said cash proceeds from the deal are estimated at AUD11m after deducting costs associated with the transaction and associated equipment leases.

The sale includes the cereal and snacks manufacturing facilities in Leeton and Darlington Point in New South Wales and in Dandenong in Victoria, as well as all brands associated with the business, including Freedom Foods, Messy Monkeys, Heritage Mill, Arnold’s Farm and Barley+. 

New York-based KKR acquired Arnott’s from US major Campbell Soup Co. last year.

The deal does not include the Crankt Protein brand, which will remain a part of Freedom Foods Group’s portfolio.

The majority of the cereal and snacks employees will transfer to the new owners, although there are likely to be some redundancies, Freedom Foods Group said.

Michael Perich, Freedom Foods Group’s CEO, added: “We believe the cereal and snacks business will thrive under an owner such as The Arnott’s Group, which is committed to investing in the business and employees to ensure a sustainable and successful future.

“This decision is consistent with the new executive team’s strategy of simplifying both our business structure and product range to ensure we are maximising growth opportunities in dairy and nutritionals and plant-based beverages.”

Arnott’s CEO George Zoghbi said: “This purchase of manufacturing sites and leading consumer brands from Freedom Foods Group will accelerate our strategy of entering new product categories and unlock innovation to benefit customers and consumers. 

“Once the purchase is finalised, our domestic manufacturing network will extend across eastern Australia from Virginia in Queensland, Huntingwood, Leeton and Darlington Point in New South wales to Shepparton and Dandenong in Victoria and Marleston in South Australia.”

The transaction is expected to be completed on 1 March.

Freedom Foods Group has had a difficult six months.

It has been undertaking a review of its accounts since August. In June, the company said it was probing the possibility of fraudulent activity after booking write-downs following the departure of senior executives.

Freedom Foods Group has been in talks with funders as part of its efforts to recapitalise the business with a cash injection of at least AUD200m.

An update on the progress of those talks was due this month but that has been pushed back. It is likely that an update on the capital raising will occur in January, the company said yesterday.

A halt in the trading of the company’s shares has also been extended until recapitalisation plans are announced.

The Australian Financial Review newspaper has suggested Freedom Foods Group will still aim to sell its canned seafood business as part of its revamp plans. As well as canned seafood, the Freedom Foods Group portfolio also includes a range of dairy, dairy-free and ingredients businesses.

Related Companies

Free Report
img

What’s the forecast for the food and grocery industry?

The food and grocery sector thrived during the pandemic, largely due to the shutdown of the food service industry and the sector’s subsequent necessity, panic-induced bulk purchasing, and spending more time at home. The market has grown as a result of inflation. Consumer unwillingness to go out and socialize, and the reopening of several hospitality facilities, helped maintain the demand for groceries, particularly online, in 2021. As consumer behavior changes, we consume more food and drink at home, and inflation increases basket sizes. GlobalData predicts that the sector will continue to hold a higher share than had been predicted prior to the pandemic. This is true despite the fact that the food and grocery sector's share of overall retail will decline from its peak in 2020. This report will discuss market forecasts and key themes in the global food & grocery industry in 2022 and beyond. It covers:
  • Market drivers and inhibitors
  • Five-year forecasts and the impact of COVID-19
  • The performance of the online channel versus offline
  • Major trends in the market including rapid delivery, ambient retailing, supply chain disruption, and inflation
Assess developments within this sector to help your business thrive in 2022 and beyond.
by GlobalData
Enter your details here to receive your free Report.

NEWSLETTER Sign up Tick the boxes of the newsletters you would like to receive. A weekly roundup of the latest news and analysis, sent every Friday. The industry's most comprehensive news and information delivered every other month.
I consent to GlobalData UK Limited collecting my details provided via this form in accordance with the Privacy Policy
SUBSCRIBED

THANK YOU

Thank you for subscribing to Just Food