Campbell to sell Arnott’s and certain international operations to KKR in US$2.2bn deal

02 Aug 2019 --- US-based Campbell Soup Company is selling its Australian brand Arnott’s and other international operations to global investment firm KKR for US$2.2 billion in cash. The deal is subject to customary purchase price adjustments. Combined with the sale of Kelsen Group last month, the aggregate price of the entire Campbell International division is US$2.5 billion.

“This was a thorough and complex process in which we considered many options. Our approach has resulted in agreements that we believe generate the greatest value from our international assets. By applying almost US$3 billion of divestiture net proceeds to reduce debt, Campbell’s balance sheet will be stronger and capable of supporting our plan to grow our focused and differentiated portfolio,” says Mark Clouse, Campbell’s President and CEO.

Under the terms of the agreement, Campbell and KKR will enter into a long-term licensing arrangement for the exclusive rights to use certain Campbell brands, including Campbell's, Swanson, V8, Prego, Chunky and Campbell's Real Stock, in Australia, New Zealand, Malaysia and other select markets in Asia, Europe, the Middle East and Africa.

FoodIngredientsFirst understands the initial term of the licensing agreement is for a period of 15 years and there could be an opportunity to extend the deal. 

Campbell notes that it will use the expected aggregate net proceeds of US$3 billion to reduce the company's debt. 

Arnott’s and Campbell’s International operations saw combined net sales of approximately US$885 million in the last 12 months, and they employ approximately 3,800 people. Arnott’s was originally acquired in 1997 and is based in Sydney, with operations in Western Sydney, Brisbane, Adelaide and Bekasi, Indonesia. Campbell’s International operations include Campbell’s simple meals businesses in Australia, Malaysia, Hong Kong and Japan, and manufacturing in Australia and Malaysia.

Closing for Arnott’s and Campbell’s International operations, as well as Kelsen Group, is expected in the first half of fiscal 2020. 

Back in August 2018, the company announced that it would divest Campbell International and Campbell Fresh in order to focus on North American business and reduce debt. This came amid shares of the 149-year-old company falling 4.3 percent in pre-market trading, and waning demand for the company’s classic soup as consumers look for healthier options. 

The June 2019 divestiture of Campbell Fresh generated approximately US$565 million. The sale of Bolthouse Farms to an affiliate of Butterfly Equity completed the divestiture and followed the company’s sale of Garden Fresh Gourmet to an affiliate of Fountain of Health USA.

Last month, the company sold Kelsen Group, a producer of baked snacks including brands Kjeldsens and Royal Dansk, to the Ferrero Group-affiliated company CTH for US$300 million. 

By Katherine Durrell