Kraft Heinz Co. said it has agreed to sell a big chunk of its cheese business to France’s Groupe Lactalis SA for $3.2 billion, as the struggling U.S. food company seeks to jump-start growth in its other businesses.
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. The Wall Street Journal first reported on the sale being imminent earlier Tuesday.
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, the company said Tuesday.
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.
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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.
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