The Kraft Heinz Company announced today that it has entered into a definitive agreement to sell its Canadian natural cheese business to Parmalat for a purchase price of $1.62 billion CAD (approximately $1.23 billion USD at current FX rates). The agreement includes the sale of natural cheese brands Cracker Barrel, P’tit Quebec and aMOOza! in the Canadian market. The proposed transaction is expected to close in the first half of 2019, subject to regulatory review and approval.
“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 Parmalat is 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.”
Under the terms of the agreement, Kraft Heinz will sell its production facility located in Ingleside, Ontario. Kraft Heinz Canada will also transfer approximately 400 employees from that facility to Parmalat.
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 Kraft Heinz Company remains steadfast in its commitment to the Canadian market, illustrated by its recent acquisition of the Vancouver-based Ethical Bean coffee brand. Across Canada, Kraft Heinz currently employs approximately 2,000 employees in its facilities and thousands more, indirectly, through its co-manufacturers.
The natural cheese business being sold contributed approximately $560 million CAD (approximately $427 million USD at current FX rates) 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.
RBC Capital Markets served as exclusive financial advisor to Kraft Heinz Canada for this transaction, while Fasken Martineau DuMoulin LLP served as legal advisors.
About Kraft Heinz
The Kraft Heinz Company (NASDAQ: KHC) is the fifth-largest food and beverage company in the world. A globally trusted producer of delicious foods, The Kraft Heinz Company provides high quality, great taste and nutrition for all eating occasions whether at home, in restaurants, or on the go. The Company’s iconic brands include Kraft, Heinz, ABC, Capri Sun, Classico, Jell-O, Kool-Aid, Lunchables, Maxwell House, Ore-Ida, Oscar Mayer, Philadelphia, Planters, Plasmon, Quero, Smart Ones and Velveeta. The Kraft Heinz Company is dedicated to the sustainable health of our people, our planet and our Company. For more information, visit www.kraftheinzcompany.com.
The Parmalat Group is a global player in the production and distribution of foods that are essential for everyday wellness: milk, dairy products and fruit beverages, which generated revenues of more than 6.6 billion euros in 2017. More than 26,000 people work at Parmalat’s facilities in Europe, the Americas, Africa and Oceania. Parmalat S.p.A., the Group's Parent Company, has been listed on the Italian Stock Exchange since October 6, 2005.
With more than 130 years of brand heritage in the Canadian dairy industry, Parmalat Canada is committed to producing great tasting, nutritious dairy products and supporting the health and wellness of Canadians through its iconic brands like Beatrice, Lactantia, Astro, Black Diamond and Balderson.
Parmalat Canada directly employs 3,000 Canadians, supports hundreds of farming families and contributes to livelihoods of thousands of Canadians who provide key services to our 16 manufacturing sites and national supply chain.