Australia's Freedom Foods Group is nearing the acquisition of an unnamed local company making cereal and snacks made with oats.

The company said it had "entered into an exclusive term sheet" to buy a "major Australia-based manufacturer of oat-based cereal and snacks".

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Announcing the potential transaction alongside its annual results, Freedom, which already sells oat-based products, did not identify the business but outlined the rationale for the move.

"Oats is an expanding consumer preference in Australia and Asia. This acquisition will enable Freedom to expand its brand and category segment offering in oat-based products in Australia and into Asia and for the first time allow Freedom to access manufacturing capability in both allergen-free and nut-based capabilities on a cost-competitive business," Freedom Foods said. "There will also be integration opportunities in milling and ingredients supplies into the new business from our in-house facilities."

Freedom Foods said it expects the deal to be "accretive" to earnings in its first full year of operation. The deal remains subject to due diligence and other customary documentation.

The company also announced it had completed the acquisition of the Darlington Point Mill in New South Wales for A$5.9m (US$4.2m). It said the purchase of the mill would support the new oats company, as well as it existing businesses. It added the mill and the planned move for the oats products company would "provide further value-adding scale benefits to the expanding sales, manufacturing and supply chain footprint of the cereal and snacks business".

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Officials for Freedom Foods could not be reached for further comment at the time of writing.