LEETON'S Freedom Foods manufacturing plant will be sold off to The Arnott's Group.
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Located at Murrami, the plant has been a key point of the company's cereal and snacks division.
However, after a year of turmoil, the Freedom Foods Group Limited has announced the sale of its cereal and snacks operations to The Arnott's Group as part of the ongoing program to simplify the company's business structure and product range, improve profitability and prioritise growth opportunities.
As indicated in the ASX announcement on November 30, Freedom Foods Group and its advisers said it had been reviewing all strategic options for the cereal and snacks business - the market-leading producer of allergen-free and healthy breakfast cereals and snacks.
While actively pursuing a "fix and retain" strategy, the group has also been exploring a potential divestment.
Freedom Foods Group has now reached agreement with The Arnott's Group for the sale of certain assets and liabilities of the cereal and snacks business for A$20 million in cash.
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Net cash proceeds are estimated at $11 million after deducting costs associated with the transaction and associated equipment leases.
The sale to also include the manufacturing plant at Darlington Point and in Dandenong in Victoria, as well as all brands associated with the business, including the Freedom Foods name itself, Messy Monkeys, Heritage Mill, Arnold's Farm and Barley+.
The majority of cereal and snacks employees, including those in Leeton, will transfer to the new owners, although there are likely to be some redundancies, which will be managed by Freedom Foods Group.
The final number will be determined by before the finalisation of the transaction following consultation with employees.
Once the purchase is finalised, our domestic manufacturing network will extend across eastern Australia from Virginia in Queensland, Huntingwood, Leeton and Darlington Point in NSW to Shepparton and Dandenong in Victoria and Marleston in South Australia.
- The Arnott's Group chief executive officer, George Zoghbi
Freedom Foods Group interim chief executive officer Michael Perich said the company considered The Arnott's Group a "highly complementary owner of cereal and snacks".
"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," he said.
Meanwhile, The Arnott's Group chief executive officer, George Zoghbi, said the group was excited about the opportunity to acquire new capabilities in portable snacks and allergen-free products, including gluten-free foods and muesli bars.
"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," Mr Zoghbi said.
"This will add three Australian manufacturing sites to our already well-invested domestic supply chain.
"Once the purchase is finalised, our domestic manufacturing network will extend across eastern Australia from Virginia in Queensland, Huntingwood, Leeton and Darlington Point in NSW to Shepparton and Dandenong in Victoria and Marleston in South Australia."
The transaction is expected to be complete on March 1.
No financing or regulatory approvals are required.
Following the sale of the Freedom Foods cereals brand, Freedom Foods Group will undertake to change its corporate name.
