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Kraft Enters Deal to Sell Several Cheese Businesses

The food firm is parting ways with some of its cheese businesses in a $3.2 billion deal with a Lactalis affiliate.

American food industry giant The Kraft Heinz Company announced Tuesday that it entered into a deal to shed its natural, grated, cultured, and specialty cheese businesses in the United States and its grated cheese business in Canada to an affiliate of Groupe Lactalis for $3.2 billion.

The potential transaction also includes the Cracker Barrel brand in the US only and Cheez Whiz outside the US and Canada, as well Kraft’s international cheese business outside the US and Canada, including the Breakstone’s Knudsen, Polly-O, Athenos, Hoffman’s brands. Lactalis will partner with Kraft Heinz on a perpetual license for Kraft in natural, grated, and international cheeses and Velveeta in shredded and international cheeses.

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

Under the terms of the transaction, Kraft will continue to own its Philadelphia cream cheese, Kraft Singles, Velveeta processed cheese, and Cheez Whiz processed cheese businesses in the US and Canada and its Kraft Sauces business globally.

Lactalis will acquire Kraft production sites in Tulare, CA, Walton, NY, and Wausau, WI and a distribution facility in Weyauwega, WI. Some 750 workers at the sites will join Lactalis following the transfer of ownership.

The deal will enable Kraft to hone its efforts on growth areas, the company said.

Earlier this year, Kraft Heinz launched a $48 million project to improve production and add capacity at its plant in Springfield, MO, which manufactures Kraft Singles, Kraft Macaroni & Cheese, and Kraft Naturals products.

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