The Australian Financial Review has reported three Australian private equity firms are competing for Tip Top against a European investment group PAI Partners which is fronting for R&R Ice Cream.
The AFR values the brand at between $250-$300 million. The sell-off follows last year's announcement that Tip Top's owner Fonterra has put everything on the table in an assessment of all investments, major assets and partnerships.
That followed the dairy giant's first ever annual loss - of $196m - largely brought about by a $439m write down in its investment with Chinese partner Beingmate, and the $183m damages it had to pay Danone following the false botulism scare.
Fonterra is wrestling with debt levels of 48 per cent and is hoping to reduce those by $800m by the end of the 2018-19 financial year.
Bids for Tip Top were expected to be confirmed on Monday. The AFR said the bidders include Australia's BGH Capital, Mercury Capital and Pacific Equity Partners, and PAI's R&R.
R&R Ice Cream is headquartered in Yorkshire, England and is rated the largest producer of ice cream in Europe by volume, and the second largest in the world, after Unilever.
Fonterra bought Tip Top in 2001, the same year it came into being. It had previously been owned by Australian businesses including Peters (now owned by R&R) and Brownes Dairy.
Prospective buyers have been told Tip Top's net sales were about $150m last financial year, with earnings before interest, tax, depreciation and amortisation at between $20-$25m.
In a statement, Fonterra said it was "pleased with both the number and the quality of the responses we have had for the sale of Tip Top. Bids closed on April 29 and we are continuing on with the process. This is a confidential process and we will not be responding to market speculation."