Transaction Highlights

Client: Kraft Heinz

Type: M&A

Value: US $3.2 billion

RBC's role: Sell-side Advisor

The Kraft Heinz Company announced today that it has entered into a definitive agreement to sell its Natural, Grated, Cultured and Specialty cheese businesses to a U.S. affiliate of Groupe Lactalis for a purchase price of $3.2 billion USD. '

The transaction represents the largest M&A transaction announced in the food industry in the U.S. in 2020 to date.

The transaction includes Kraft Heinz’s Natural, Grated, Cultured and Specialty cheese businesses in the U.S., Grated cheese business in Canada and the entire International Cheese business outside these two countries, including the following brands: Breakstone’s, Knudsen, Polly-O, Athenos, Hoffman’s, Cracker Barrel in the U.S. only, and outside the U.S. and Canada only, Cheez Whiz.

In addition, Kraft Heinz will partner with Groupe Lactalis on a perpetual license for Kraft in Natural, Grated and International cheeses and Velveeta in Shredded and International cheeses. The cheese businesses being sold contributed approximately $1.8 billion USD to Kraft Heinz’s net sales for the twelve months ended June 27, 2020. The transaction valuation represents an approximate 12x multiple of LTM Adjusted EBITDA for the standalone business. Kraft Heinz expects to use post-tax transaction proceeds primarily to pay down debt.

The proposed transaction is expected to close in the first half of 2021, subject to regulatory review and approval.

The Kraft Heinz Company is one of the largest global food and beverage companies, with 2019 net sales of approximately $25 billion. The Company’s iconic brands include Kraft, Heinz, ABC, Capri Sun, Classico, Jell-O, Kool-Aid, Lunchables, Maxwell House, Ore-Ida, Oscar Mayer, Philadelphia, Planters, Plasmon, Quero, Smart Ones and Velveeta. Across the globe, Kraft Heinz currently employs approximately 37,000 employees in its facilities and thousands more, indirectly, through its co-manufacturers.

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