Arnott's could get rid of orange slices after the sale, but Tim Tams will be safe

A sale of Arnott 's to KKR' s investment center could result in the disappearance of a number of highly sought after biscuit products in an effort to increase the value of the society.

On Wednesday, private equity firm KKR was selected as the successful bidder for Campbell Soup Co's international brand division, which includes Arnott's after the company's purchase in 1997.

The agreement, whose value is estimated at 3.15 billion Australian dollars (3.29 billion New Zealand dollars), should be finalized in the coming days. So there are still questions about what the American multinational plans to do next with the iconic Australian activity.

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In general, KKR's strategy is to buy companies, make changes to improve their bottom line, and then resell them at a profit, through a direct sale or a listing.

Brendan Wykes, a partner at Redlich Holding and a specialist in private equity transactions, expects KKR to implement the "usual mantra".

"I imagine they're going to do what most private equity firms are doing, looking to make their investment in about two to five years," he said.

"KKR will seek to improve the company's revenues and, to the extent that they probably finance this deal with a debt, they will seek to repay as much as possible this debt in the meantime."

Professor Daniel Samson, an expert in manufacturing and commercial operations at the University of Melbourne, agrees that this will likely be KKR's plan for Arnott. But he says his strategy will probably also involve getting rid of some "lazy badets".

"One way to increase the value of a company is to reduce its operating costs, which could involve reducing the number of different products sold," he said.

REDUCE COOKIES?

Arnott & # 39; s offers a wide range of biscuits, sold in individual and varied packages. Some of the less popular choices, such as orange slices or milk peanuts, could be rewarded, Samson estimates.

"Like all businesses, Arnott's offers great-selling products and niche products, so one way to make the company more profitable would be to combine or eliminate the more specialized options," he says. Samson said.

Samson added that other methods of cost reduction might involve streamlined management or increased efficiency of the company's resources.

Arnott's employs approximately 2,400 Australians in its offices and manufacturing plants and has made a profit of 76.5 million Australian dollars for the fiscal year 2018, up 14% over the previous year. ;last year.

KKR's local portfolio already includes a number of Australian companies, such as the accounting software company MYOB, which she bought for $ 2 billion Australian earlier this year, and the group of Australian pubs and restaurants Venue Co.

The US private equity giant also holds stakes in laser hair removal companies, Laser Clinics Australia, in the healthcare sector, GenesisCare and the lender Pepper Group, which it plans to introduce into the market at the same time. customers later this year.

Wykes said KKR could also seek to acquire other businesses in a similar area to Arnott's, with the ultimate goal of grouping and listing them "in a timely manner".

In this case, Arnott's would return to Australia's hands, as retail investors can tackle the popular brand.

Although Arnott has been owned by foreigners since the end of the 1990s, some customers have reacted negatively to the announcement of the KKR acquisition, with some lamenting that another "Australian" brand has pbaded. in the hands of the United States.

"Whimsical Tim Tams owned by anyone except Australia," noted a cookie fan on Facebook.

"How degrading for us."