Kraft Heinz to Sell Natural Cheese Business to Lactalis for $3.2 Billion | Financial Buzz

Kraft Heinz to Sell Natural Cheese Business to Lactalis for $3.2 Billion

Kraft Heinz (NASDAQ: KHC) revealed Tuesday it is selling its Natural, Grated, Cultured and Specialty cheese businesses to Lactalis for a total of USD3.2 Billion. The agreement is set to be finalized by the beginning of 2021 upon regulatory review and approval. 

Breakstone’s, Polly-O, Athenos, Hoffman’s, Knudsen and Cracker Barrel are part of the deal, making up for USD1.8 Billion in sales over the last year. Furthermore, the french corporation will be licensing the Kraft cheese brand. 

Kraft will use the money acquired from the transaction to pay off some of its debt. CFO, Paulo Basilio, communicated that the company anticipates its adjusted earnings per share to decrease by 5% as a consequence of the sale. 

The American food company will still own the Philadelphia Cream Cheese, Kraft Singles, Velveeta Processed Cheese and Cheez Whiz Processed Cheese businesses within the U.S. and Canada, and the Kraft, Velveeta and Cracker Barrel Mac & Cheese businesses worldwide, and the Kraft Sauces operations worldwide. 

“We believe these cheese and dairy businesses will thrive in the hands of a global dairy company like Groupe Lactalis,” said Kraft Heinz CEO Miguel Patricio. “At the same time, the transaction will enable us to build 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.”

Shares were up 1% in early morning trading following the long-term plan presented to investors. The stock holds a market value of USD39.5 Billion and has increased less than 1% in 2020.