The cheese businesses being sold contributed nearly $1.8bn to Kraft Heinz’s net sales for the 12 months ended 27 June 2020.
The Kraft Heinz Company (Kraft Heinz) has agreed to sell is natural, grated, cultured and speciality cheese businesses to an American subsidiary of the French dairy firm Groupe Lactalis for $3.2bn.
The transaction includes the entire international cheese business outside of the two countries, along with the brands: Breakstone’s, Knudsen, Polly-O, Athenos, Hoffman’s, Cracker Barrel in the US only and outside the US and Canada only, Cheez Whiz.
Nearly 750 employees from Kraft Heinz will be transferred to the French dairy firm
As part of the deal, Kraft Heinz will sell its production facilities located in Tulare, California; Walton, New York and Wausau, Wisconsin and a distribution centre in Weyauwega, Wisconsin. About 750 employees are expected to be transferred to the French dairy firm in the process.
Subject to regulatory approval, the deal is expected to be closed in the first half of next year.
Kraft Heinz CEO Miguel Patricio said: “We believe these cheese and dairy businesses will thrive in the hands of a global dairy company like Groupe Lactalis.
“At the same time, the transaction will enable us to build a sustainable competitive advantage in businesses where we have stronger brand equity, greater growth prospects and can use our manufacturing scale and consumer-based platforms approach. This is a great example of agile portfolio management at work.”
Furthermore, the American food company has agreed to partner with Groupe Lactalis on a perpetual license for Kraft in natural, grated and international cheeses and Velveeta in shredded and international cheeses.
Under its new operating model, Kraft Heinz said that it will focus on growth areas and plans to take strategic action where appropriate, helping it to enhance strategic focus and create shareholder value.
The businesses being sold contributed about $1.8bn to the company’s net sales for the 12 months ending 27 June 2020. The proceeds will be used by the company to pay its debt.
On the transaction, RBC Capital Markets served as exclusive financial advisor to Kraft Heinz, while Paul, Weiss, Rifkind, Wharton & Garrison served as legal advisors.