Campbell's swoop on Arnotts mops up majority control: The defence of Australia's oldest biscuit maker has finally crumbled, writes Robert Milliken

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The Independent Online
CAMPBELL SOUP, the giant American food company, yesterday claimed victory in a four- month battle to take over Arnotts, Australia's oldest and largest biscuit company, when it secured ownership of almost 54 per cent of the company's shares.

The outcome was the climax of one of Australia's most heated takeover fights in years. The Campbell victory was delivered by Australian Mutual Provident, one of the country's biggest insurance companies, which announced yesterday it had decided to sell almost three quarters of its Arnotts shares to the American soup company, giving it a majority holding in Arnotts.

The AMP decision shocked other Arnotts institutional investors and shareholders because AMP a week ago rejected the Campbell offer of Adollars 9.50 ( pounds 4.60) a share for Arnotts. As the second-largest Arnotts shareholder, AMP's decision was crucial to keeping the biscuit company in Australian hands.

With victory eluding it, Campbell extended its initial offer deadline of 28 January by one week, allowing it more time to lobby and culminating in yesterday's turnaround by AMP.

The Arnotts takeover battle has generated great controversy in Australia because the biscuit company, with its emblem of a multicoloured native rosella parrot, has grown to the status of a national icon since it was founded 127 years ago.

The swoop by Campbell came at a time when Australians had become sensitive about other big companies falling into foreign hands, partly as a result of shake- outs from the financial excesses of the Eighties.

Unlike some other victims, Arnotts remained a strong performer. A fortnight ago, it reported a net profit of Adollars 53m ( pounds 25m) for the half-year to December, almost 80 per cent higher than the previous year. It makes two out of every three biscuits sold in Australia, and is one of the two most recognised brand names in the country, along with Foster's Lager.

William Arnott, a young Scottish baker who emigrated to New South Wales in 1850, started the business with capital of pounds 12. Scottish prudence and thrift have guided the company's fortunes ever since. Campbell initially bought into Arnotts as a white knight in 1985 when the company was fending off a takeover bid from Alan Bond, the now-bankrupt entrepreneur. Mr Bond was reputedly backed by Nabisco of the US, the world's biggest biscuit manufacturer, which had unsuccessfully preyed on Arnotts in the Sixties.

Despite Campbell finally achieving majority ownership yesterday, its actual control of Arnotts' board is likely to be limited by a 1985 agreement between the two companies. Under those terms, its voting power is restricted to 14.9 per cent. Campbell would have to achieve at least 85 per cent ownership to be sure of full control, although it seemed inevitable yesterday that its influence over the company's fortunes will now steadily increase.

Up to now, Arnotts' operations have been confined largely to Australia. Under David Johnson, Campbell's Australian-born chief executive in the US, Campbell has sought control of Arnotts as a springboard into the expanding market for Western foods in Asia, where other companies, including United Biscuits of Britain, are already active. Mr Johnson said yesterday: 'We look forward with enthusiasm to building the great Arnotts brand in Asia and returning to our solid working partnership with Arnotts.'

Explaining AMP's 11th-hour decision to sell more than 11 million Arnotts shares to Campbell, Leigh Hall, AMP's general manager, said the insurance company had earlier rejected the Campbell offer because it believed it would not succeed and it hoped to achieve a better price later.

'However, Campbell now has close to a majority holding in Arnotts and Campbell can readily move to a majority position . . . AMP now believes the correct commercial decision on behalf of our policyholders is to reduce the Arnotts exposure.'

Alice Oppen, an Arnotts family member who has led a vociferous campaign against Campbell, attacked AMP's action. 'It is hardly Australian, mutual or provident. My ancestors worked hard and they didn't do it to sell out to the Americans.' She believed the family's role would still be 'crucial' and that Campbell would be restricted in taking full control.

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