Lactalis to buy Kraft Heinz cheeses in US

French dairy giant Lactalis plans to buy several of Kraft Heinz’s US cheese businesses for $3.2 billion (€2.6bn), Kraft Heinz has announced. The deal is expected to close in the first half of 2021, subject to regulatory approval.

The transaction includes Kraft Heinz’s natural, grated, cultured and speciality cheese businesses in the US, Grated cheese business in Canada, and the entire International Cheese business outside these two countries, including the following brands: Breakstone’s, Knudsen, Polly-O, Athenos, Hoffman’s, Cracker Barrel in the US only, and outside the US and Canada only, Cheez Whiz. In addition, Kraft Heinz will partner with Groupe Lactalis 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 worldwide, and the Kraft Sauces business worldwide.

Under the terms of the agreement, Kraft Heinz will sell production facilities located in Tulare, CA, Walton, NY, and Wausau, WI, and a distribution centre in Weyauwega, Wisconsim. These facilities and their employees will continue to operate in ordinary course. Approximately 750 employees will be transferred from Kraft Heinz to Groupe Lactalis.

“We believe these cheese and dairy businesses will thrive in the hands of a global dairy company like Groupe Lactalis,” says 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.”

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