Food acquisition news : US food producer Kraft Heinz has agreed to offload its Canadian natural cheese business to Italian dairy and food company Parmalat for CAD$1.62 billion ($1.23 billion).

The deal covers Cracker Barrel, P’tit Quebec and aMOOza! and other natural cheese brands. Kraft Heinz had earned around $427 million from its Canadian natural cheese business in 2017.

Kraft Heinz plans to use the proceeds from the sale of the natural cheese unit in Canada to mainly reduce its debt. The transaction follows the company’s recent acquisition of Vancouver-based Ethical Bean coffee brand.

As per the deal terms, the US food producer will transfer ownership of its production facility in Ingleside, Ontario along with about 400 employees to Parmalat.

Commenting on the sale of the Canadian natural cheese business, Bernardo Hees – CEO of Kraft Heinz, said: “We’re excited about what this transaction means for our future growth and business in Canada.

“We also believe Parmalat is uniquely positioned to advance the natural cheese business given their experience and focus on the dairy industry. At the same time, we can focus on the segments and categories where we have stronger brand equity, competitive advantage and greater growth prospects.”

Kraft Heinz says that it will retain its other cheese products in Canada such as Philadelphia, Cheez Whiz and Kraft Singles, which are manufactured in Mount Royal, Quebec, where the company has nearly 900 employees.

For Parmalat, the acquisition enables it to get a hold in the branded segment of the natural cheese with the Cracker Barrel brand, helping it to complement its Black Diamond branded natural cheese products in Canada. It will also help in boosting its position in Canada, especially in Quebec where it has limited presence.

The deal is anticipated to be wrapped up in the first half of next year should it get regulatory approval.

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  Bernardo Hees, Canada, Food acquisition news, Parmalat, The Kraft Heinz Company