Kraft Heinz Co, on Tuesday, it has entered into an agreement of worth $1.62 billion with Parmalat. In the deal Kraft is being selling its business of Canadian natural cheese to Parmalat. By this deal Kraft is trying to cut off its debt whereas Parmalat is trying to expand in North America.
Brands like P’tit Quebec, aMOOza and Cracker Barrel in Canadian market are also included in the cheese business being sold by Kraft. In year 2017, the net sales by the business being sold were $560 million. As per agreement, Kraft’s production facility in Ingleside, Ontario along with its 400 staff will be added to Parmala. Kraft will keep ownership of its other cheese product line. These products, processed by Kraft Heinz Canada at Mount Royal, Quebec with staff strength of 900 people, include Cheez Whiz, Kraft Singles and Philadelphia. Kraft like other firms has been affected by the rising costs of transportation and raw materials. Kraft intends to utilize the proceeds to cut its huge debt of $31 billion. This will help to counterbalance the affecting EPS by reducing expenses incurred on interest payments.
By employing over 2000 staff in its facilities directly and even far more than that indirectly through vendors and co manufacturers, Kraft’s showed its commitment to Canadian Market and recent acquisition of Vancouver based Ethical Bean coffee is also its part.
The agreement got through competitive bidding to become finalized and the transaction is expected to be completed by June 2019, subject to clearance from regulators.
Parmalat is counting the deal to be supportive to generate more revenue by its farms and also provide more job security to 3000 employees working at its 16 dairy processing plants.
This acquisition has also added towards the presence of French giant Lactalis in North America as Parmalat is its subsidiary.