BUFFALO, NY. — The Lactalis Group has agreed to acquire some Kraft Heinz Co. cheese businesses for a purchase price of $3.2 billion. The transaction includes Kraft Heinz’s natural, grated, cultured and specialty cheese businesses in the United States, the grated cheese business in Canada, and the entire international cheese business, including the Breakstone’s, Knudsen, Polly-O, Athenos, Hoffman’s and Cracker Barrel brands, as well as the Cheez Whiz brand outside of the US and Canada.
Kraft Heinz will partner with Lactalis Group on a perpetual license for Kraft in natural, grated and international cheeses and Velveeta in shredded and international cheeses. Kraft Heinz will retain the Philadelphia Cream Cheese, Kraft Singles, Velveeta processed cheese and Cheez Whiz processed cheese businesses in the US and Canada, the Kraft, Velveeta and Cracker Barrel Mac & Cheese businesses globally and the Kraft Sauces business globally.
The proposed transaction is expected to close in the first half of 2021 and is subject to regulatory review and approval.
“We believe these cheese and dairy businesses will thrive in the hands of a global dairy company like Groupe Lactalis,” said Miguel Patricio, chief executive officer of Kraft Heinz. “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.”
The businesses being sold generated approximately $1.8 billion in net sales for the year ended June 27. The transaction includes production facilities in Tulare, Calif.; Walton, NY; and Wausau, Wis.; and a distribution center in Weyauwega, Wis. Approximately 750 employees will be transferred from Kraft Heinz to the Lactalis Group.
Kraft Heinz said it will use the post-tax proceeds from the sale primarily to pay down debt.
Based in Laval, France, Lactalis Group has expanded its US presence in recent years. The company operates eight plants in New York, Vermont, New Hampshire, Wisconsin, Idaho, Arizona and California. Brands include Président, Galbani, Parmalat, Stonyfield Organic, siggi’s, Karoun, rondele and Black Diamond. The company employs 2,600 in the United States.
“The people of Kraft Heinz have built an extraordinary portfolio of high-quality cheese products and brands that consumers love and trust — and we are honored to have been chosen by Kraft Heinz to help carry this legacy forward,” said Thierry Clément, CEO of Lactalis North America. “This combination of complementary offerings is a clear strategic and cultural fit that will create important new opportunities for domestic and international expansion, product innovation, and positive community and employee impact. We look forward to working with and learning from our new colleagues, building on our proud histories together and continuing our collaborative strategy for expansion: to invest, to include, to support, and to grow.”
The transaction was announced as part of a broader transformation plan unveiled by Kraft Heinz Co., which includes a new operating model, increased marketing spend and cost savings targets. Kraft Heinz is reorganizing its portfolio of more than 55 individual categories into six consumer-driven platforms: Taste Elevation, Easy Meals Made Better, Real Food Snacking, Fast Fresh Meals, Easy Indulgent Desserts, and Flavorful Hydration. The company said it will take a disciplined approach to identifying and investing in opportunities to grow, energize or stabilize each platform. Additionally, Kraft Heinz said it is targeting approximately $2 billion in gross productivity efficiencies through 2024.