The Kraft Heinz Company (KHC.O) announced Tuesday it is selling its so-called natural cheese business to Parmalat in a deal valued at $1.62 billion, which, if approved, will see the conglomerate scale back its presence in Canada.
In the agreement, Parmalat will pick up assets that contributed approximately $560 million to Kraft Heinz’s net sales last year, including household cheese brand Cracker Barrel.
The deal will also include the sale of a processing plant in Ingleside, Ont. and its 400 employees.
“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.
"We are excited to work closely with the community and our stakeholders to ensure we can grow sustainably and help Canada's natural cheese business thrive.”
In a release, Kraft Heinz said it will use the proceeds of the transaction primarily to pay down debt.
The company also said it remains “steadfast in its commitment to the Canadian market,” using its recent acquisition of a Vancouver-based coffee brand as an example. Kraft Heinz directly employs 2,000 people in Canada.
The transaction is expected to close in the first half of 2019, after it receives regulatory approval.