Many popular Australian brands are continuing to be bought out by international companies, with one expert suggesting the sell-off will only continue to intensify.
The latest big brand to depart Australia is Victorian-based Patties Foods, which owns Four’N Twenty, Herbert Adams, Boscastle, Nanna’s and Leader.
Vesco Foods — which includes On the Menu, Super Nature, Lean Cuisine, Annabel Karmel and Jarraballi — has also been snapped up.
The company also provides commercial food services under the 7 Star, Clever Cuisine and Enrico’s brands.
Patties Foods and Vesco Foods have both been bought by Pacific Alliance Group, which is based in Hong Kong but also has offices in Australia.
The price tag has not been revealed but is reportedly more than $500m.
PAG’s Australian-based private equity team has also invested in Craveable Brands, which includes Red Rooster, Oporto and Chicken Treat, as well as The Cordina Group, REX Airlines, and Unispace.
The conglomerate also previously acquired The Cheesecake Shop.
A Facebook group called Australian Made Products has blasted the latest move on Patties Foods and many people who follow the page have also expressed disappointment.
“Seriously, because the parent company is owned overseas we are not going to be buying them and boycott them,” one person commented.
“You want something different because you prefer the taste? Fine. But you’re talking about a whole lot of Australians who will be out of a job if the company closes.
“What about their wage, their mortgage, their bills the money they spend here in Australia?”
But another person commented: “Just be aware that even if foreign owned, these businesses still employ Australians in local factories and put food on their tables. The choice is limit your purchases to products made in Australia.”
Another person wrote: “Buy your pies from your local bakery. I’m sure they would appreciate your support.”
Patties Foods chief executive officer Paul Hitchcock said the change would unlock further investment and innovation.
“It is recognition of our reputation as a highly respected food manufacturer in Australia and New Zealand with a long list of loved food brands,” he said.
“The acquisition presents a significant opportunity for Patties Foods, unlocking further investment into market leading innovation, well-known brands and manufacturing capabilities.”
Sid Khotkar, the managing director and head of PAG Private Equity in Australia and New Zealand, said it was a unique opportunity to take the brands to the “next level”.
The sale of Patties Foods and Vesco Foods follows a series of other Australian brands that have been sold to overseas companies and conglomerates, including:
- Arnott’s, which was bought by the US-owned Campbell’s Soup Company, then on-sold to US investment fund KKR;
- Uncle Tobys, which is owned by Swiss-based Nestle;
- Fosters beer, which is owned by Japanese company Asahi;
- Tooheys, which is owned by Kirin; and
- RM Williams, which was sold to LVMH in France before being repurchased by mining magnate Andrew Forrest and his wife Nicola through their company Tattarang.
Edith Cowan University professor of entrepreneurship and innovation Pi-Shen Seet told NCA NewsWire there was a long history of Australians selling brands to non-Australians that predated globalisation.
“Over the past 20 to 30 years, it’s gone up because of the general globalisation around the world,” he said.
“Australian companies have made purchases or acquisitions overseas, and international companies have made lots of acquisitions in Australia.”
Professor Seet said Australia was considered a business friendly nation.
“A lot of it may not be consumer facing — they make purchases in the mining sector or agricultural sector, and therefore it doesn’t get highlighted very strongly in terms of what people go and see in the shops,” he said.
“But others you do find consumer brand facing and therefore that has an impact on what consumers see.”
Professor Seet said some of the companies that were being sold off were as a result of Baby Boomers reaching retirement age and not having anyone in their family willing to successfully take over the business.
“Some of these companies are undergoing baby boomer transition of family ownership, so a lot of the owners are coming to retirement age and they want to exit,” he said.
“If they don’t have a successor ... then they have to find another way to exit and one of the things is you either sell to an investment type of company like PAG, which is a private equity firm, or you do a trade sale, which is when you sell to a company.
“If you’re the owner, you want the best deal and the best deal may not be one that comes from an Australian company.”
Professor Seet noted the Covid-19 pandemic had stopped mergers and acquisitions for a couple of years but they were picking up again.
“Now that Covid has gone off and they can come back to Australia to do their due diligence and all the rest of it, they will come in and start to do deals again,” he said.
“If some of these companies were highly reliant on JobKeeper, well ... you can’t rely on the government to keep propping you up anymore.
“So there is a Covid story too as part of this as to why things are happening now.”
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