Kraft Heinz plant sold

Par­malat to buy In­gle­side fa­cil­ity

Standard-Freeholder (Cornwall) - - FRONT PAGE - ALAN S. HALE

IN­GLE­SIDE — Kraft Heinz will no longer own the cheese plant in In­gle­side af­ter the com­pany sells the fa­cil­ity and trans­fers the 400 em­ploy­ees who work there over to Par­malat SpA as part of a $1.62-bil­lion deal for its Cana­dian nat­u­ral cheese busi­ness.

The deal is ex­pected to close in the first half of 2019.

The Stan­dard-Freeholder reached out to the man­ager of the In­gle­side plant, Pranav Shah, seek­ing any fur­ther in­for­ma­tion on how the change in own­er­ship might af­fect the fa­cil­ity’s em­ploy­ees and oper­a­tions, but he said he could not add any­thing more than what the com­pany has al­ready made pub­lic about the deal.

Mayor-elect of South Stor­mont Bryan McGillis said ev­ery­thing he has seen about the deal in­di­cates it will be a con­tin­u­a­tion of the sta­tus quo as far as the town­ship is con­cerned, which is a good thing.

“I’m glad to see some­one is tak­ing it over. We’re talk­ing about 400 good jobs for this com­mu­nity, plus all the spinoff for the other in­dus­tries that have been do­ing busi­ness with Kraft Heinz,” said McGillis. “I think ev­ery­thing will be al­right, it all looks good ... Kraft Heinz has been a good cor­po­rate cit­i­zen for us for many years, and I hope that Par­malat will be the same.”

The money from the deal with Par­malat will al­low Kraft Heinz to trim its debt while, on the flip­side, the sale is an op­por­tu­nity for Par­malat’s par­ent com­pany, Lac­talis, to ex­tend its North Amer­i­can foot­print. The deal comes a month af­ter the new United States-Mex­ico-Canada Agree­ment (USMCA) was signed, un­der which Canada par­tially opened its pro­tected do­mes­tic mar­ket to the United States.

“We’re ex­cited about what this trans­ac­tion means for our fu­ture growth and busi­ness in Canada,” said Bernardo Hees, Chief Ex­ec­u­tive Of­fi­cer of Kraft Heinz in a state­ment. “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.”

The cheese busi­ness be­ing sold by Kraft, which in­cludes brands like Cracker Bar­rel, P’tit Que­bec and aMOOza, gen­er­ated about $560 mil­lion in net sales in 2017, Kraft and Par­malat said in state­ments on Tues­day.

The trans­ac­tion fol­lowed a com­pet­i­tive bid­ding process, Par­malat said.

The U.S. food group will con­tinue to own and mar­ket other cheese prod­ucts, in­clud­ing Philadel­phia, Cheez Whiz and Kraft Sin­gles, which are pro­cessed in Que­bec.

RBC Cap­i­tal Mar­kets served as the ex­clu­sive fi­nan­cial ad­vi­sor to Kraft Heinz Canada, while Fasken Martineau DuMoulin LLP served as le­gal ad­vis­ers.

Par­malat said the ac­tiv­ity will re­in­force its cen­tury-old Cana­dian busi­ness that al­ready com­prises 3,000 em­ploy­ees and 16 dairy pro­cess­ing plants, help­ing to se­cure jobs and farm rev­enue.

The re­vised North Amer­i­can trade deal has irked Cana­dian farm­ers who see a threat to the coun­try’s sup­ply man­age­ment sys­tem, but the agree­ment may bring limited gains for U.S. pro­duc­ers.

Par­malat’s ac­qui­si­tion in Canada marks a fur­ther ad­di­tion to the North Amer­i­can foot­print of France’s Lac­talis, the world’s largest dairy firm that con­trols nearly 90 per cent of Par­malat.

The deal would re­in­force its pres­ence “in the strate­gic mar­ket for cheese with high added value in Canada,” Lac­talis said in a sep­a­rate state­ment on Wed­nes­day.

Lac­talis has in the past year struck deals to ac­quire U.S. or­ganic yo­gurt brand Stony­field, pre­vi­ously owned by fel­low French group Danone, and agreed to buy siggi’s, a U.S.-based maker of Ice­landic yo­gurt.

In an­other over­seas ac­qui­si­tion, Lac­talis last month agreed to buy the in­fant for­mula busi­ness of Aspen Phar­ma­care, in a move to re­vive its baby milk af­ter a health scan­dal in its home mar­ket.

A sal­mo­nella out­break at its sole in­fant for­mula pro­duc­tion site in north­west France last year caused dozens of ba­bies to fall sick and led to a global prod­uct re­call.

Nat­u­ral cheeses can in­clude un­ripened cheeses such as cot­tage cheese, soft cheese such as Camem­bert or hard cheeses such as Ched­dar.

Pro­cessed cheese is made by pas­teur­iz­ing, emul­si­fy­ing, and blend­ing nat­u­ral cheese. Sev­eral va­ri­eties of nat­u­ral cheeses may be mixed, and pow­dered milk, whey, cream or but­ter, and wa­ter may be added, ac­cord­ing to the U.S. En­vi­ron­men­tal Pro­tec­tion Agency.


The Kraft Heinz cheese plant in In­gle­side.

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