Parmalat buys canadian cheeses for more than 1 billion euros

Irving Hamilton
November 9, 2018

Parmalat, which is controlled by France's Lactalis, announced that it will add several new brands to its portfolio with the C$1.62bn (US$1.23bn) acquisition of the natural cheese division of Kraft Heinz Canada following a "competitive bidding process".

This operation, subject to the approval of canadian regulatory authorities, is expected to be completed in the second quarter of 2019, said the French group.

The activity includes a production site at Ingleside, in the province of Ontario, which employs approximately 400 people. "At the same time, we can focus on the segments and categories where we have stronger brand equity, competitive advantage and greater growth prospects". Across Canada, Kraft Heinz now employs approximately 2,000 employees in its facilities and thousands more, indirectly, through its co-manufacturers.

Will Kraft Heinz's efforts to restructure and repay debt pay off?

"Today's announcement speaks volumes about our drive to support dairy farmers, help the local economy and continue to build on our family tradition of cheese making", Parmalat CEO Mark Taylor said in a release.

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In a release, Kraft Heinz said it will use the proceeds of the transaction primarily to pay down debt.

RBC Capital Markets served as exclusive financial advisor to Kraft Heinz Canada for this transaction, while Fasken Martineau DuMoulin LLP served as legal advisors. The business generated about $560 million in net sales in 2017.

Canada manages dairy supplies by setting production quotas, prices and curtailing imports.

Parmalat's Canadian business includes almost 3,000 employees, 16 dairy processing plants, and a research and development facility.

The company says the acquisition would help grow its business and include further investment.

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