CANADA – Kraft Heinz has announced that it has agreed to sell its Canadian natural cheese business to Parmalat for US$1.23 billion with the transaction expected to close in the first half of 2019, subject to regulatory review and approval.
The agreement includes the sale of natural cheese brands Cracker Barrel, P’tit Quebec and aMOOza! in the Canadian market.
As part of the agreement, Kraft Heinz will sell its production facility located in Ingleside, Ontario while Kraft Heinz Canada will also transfer approximately 400 employees from that facility to Parmalat.
“We’re excited about what this transaction means for our future growth and business in Canada,” said Bernardo Hees, Chief Executive Officer of Kraft Heinz.
“We also believe Parmalatis uniquely positioned to advance the natural cheese business given their experience and focus on the dairy industry.
At the same time, we can focus on the segments and categories where we have stronger brand equity, competitive advantage and greater growth prospects.”
Kraft Heinz will continue to own and market its other cheese products, including Philadelphia, Cheez Whiz and Kraft Singles, which are processed in Mount Royal, Quebec, where Kraft Heinz Canada employs approximately 900 employees.
The disposal follows proposal to sale its consumer brand business in India to Zydus Wellness for US$628 million.
In Canada, the food and beverage firm announced that it had completed the acquisition of Vancouver-based Ethical Bean coffee brand, reinforcing its steadfast commitment in the Canadian market.
In New Zealand, Kraft Heinz got the approval from competition authority to acquire New Zealand’s maker of coffee, deserts and condiments, Cerebos Gregg’s.
It has also invested US$100 million in Evolv Ventures, a venture fund that will invest in emerging tech companies transforming the food industry.
The venture fund aimed to accelerate the company’s exposure to emerging technologies and businesses, as well as improve its position in the industry.
According to the company, the natural cheese business being sold contributed approximately US$427 million to Kraft Heinz’s net sales in 2017.
Kraft Heinz expects to use transaction proceeds primarily to pay down debt, with reduced interest expenses expected to offset the majority of EPS dilution on a run-rate basis.