Dairy, plant beverages and cereals producer Freedom Foods is now planning a name change after confirming the $20 million sale of its trademark cereals and snacks division to private equity-owned Arnott's Group.
Financially stretched Freedom will bank about $11 million when the sale is completed within the next two months.
Its decision to offload the division has been on the cards since November when Freedom began reviewing all strategic options for the cereals and snacks business, which includes plants at Leeton and Darlington Point in southern NSW and Dandenong in Victoria.
Brands to join the Arnotts stable include its champion Freedom Foods cereal product lines, plus Heritage Mill, Arnold's Farm, Barley+ and Messy Monkeys.
The division's sales in 2019-20 were worth almost $70m, but were down about $11m on the previous year.
Freedom's interim chief executive officer Michael Perich said The Arnott's Group would be a "highly complementary owner" of the cereals and snacks business which he expected to thrive under Arnott's ownership.
Freedom's sell-off was consistent with its strategy of simplifying the business and its product range so it could maximise growth opportunities in dairy and nutritionals and plant-based beverages.
The sale does not include its Crankt Protein brand's snacks and shakes product line up which will remain part of the company's nutrition and health segment.
About $9m from the sale will be deducted to cover transaction costs and equipment leases.
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Arnotts Group CEO George Zoghbi said the three manufacturing site acquisitions would enable his company to accelerate its new product category ambitions.
"This purchase of manufacturing sites and leading consumer brands from Freedom Foods Group will unlock innovation to benefit our customers.
The KKR-owned Arnotts Group, which includes the Campbells Soup portfolio in Australia, will almost double the number of processing plants the company has between Brisbane and Adelaide when its purchase is finalised.
In November, after a long forensic investigation of Freedom's accounts the company confirmed previous concerns about discrepancies in its stocks and earnings records, which culminated in a $590 million blowout in losses and asset writedowns for 2019-20.
The company's annual general meeting, postponed until lthe end of this month, is expected to deliver shareholders with plans for a corporate name change after the sale of its Freedom Foods brand, plus details of its capital restructure, currently being hammered out, but yet to be finalised, with a new investor.