Kraft Heinz Nears Deal to Sell Part of Cheese Business to Lactalis -- Update
September 15 2020 - 11:52AM
Dow Jones News
By Cara Lombardo and Annie Gasparro
Kraft Heinz Co. is nearing a deal to sell a big chunk of its
cheese business to France's Groupe Lactalis SA for about $3.2
billion as the struggling U.S. food company seeks to jump-start
growth in its other businesses, according to people familiar with
the matter.
The deal is expected to be announced Tuesday, the people said,
assuming there isn't a last-minute hitch. The transaction involves
Kraft Heinz's natural-cheese business and consists of a mix of
brands in the U.S. and Canada and the company's cheese business
outside of North America, some of the people said.
Kraft Heinz has struggled in recent years with consumers
defecting to foods that seem trendier or healthier and the pressure
to revive sales has tempered its ability to improve profitability.
That is reflected in a stock that has lost more than half its value
and now gives the company a market capitalization of about $40
billion, not much more than its debt load of nearly $30 billion.
Some proceeds from the sale are earmarked for debt reduction, one
of the people said.
Kraft is holding a virtual meeting with its investors on Tuesday
and already announced it plans to cut $2 billion in costs over five
years, returning to the strategy that inspired the company's
formation in a merger five years ago.
Closely held Lactalis, a global dairy company based in France,
produces brie, ricotta and other cheeses in the U.S. and sells them
under brands including President.
The company, which entered the U.S. about 40 years ago, has been
on an expansion spree here, acquiring Stonyfield organic yogurt
from Danone SA in 2017 in a deal valued at $875 million.
Adding the Kraft cheese business would boost the company's
footprint further at a time when demand for staple groceries is
higher than ever amid the coronavirus pandemic.
Write to Cara Lombardo at cara.lombardo@wsj.com and Annie
Gasparro at annie.gasparro@wsj.com
(END) Dow Jones Newswires
September 15, 2020 11:37 ET (15:37 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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