PITTSBURGH — The Parmalat Group, a producer and distributor of dairy products, has agreed to acquire the Canadian natural cheese business of the Kraft Heinz Co. for a purchase price of approximately $1.23 billion. The deal includes the Cracker Barrel, P’tit Quebec and aMOOza! cheese brands in the Canadian market. The transaction remains subject to regulatory review and approval and is expected to close in the first half of 2019.
Under terms of the agreement, Parmalat will add Kraft Heinz’s production facility in Ingleside, Ont., and approximately 400 employees at that facility. Kraft Heinz will continue to own and market other cheese products, including Philadelphia, Cheez Whiz and Kraft Singles, which are processed in Mount Royal, Que., where Kraft Heinz Canada employees approximately 900 people.
The company said it remains committed to the Canadian market, where it recently acquired Vancouver-based Ethical Bean coffee brand and employs approximately 2,000 in its facilities and thousands more through co-manufacturers.
The business being sold generated approximately $427 million in net sales in 2017. Kraft Heinz said it plans to use the proceeds from the sale to pay down debt, with reduced interest expenses expected to offset the majority of earnings-per-share dilution on a run-rate basis.
“We’re excited about what this transaction means for our future growth and business in Canada,” said Bernardo V. 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.”