The divestment of the popular hot-dog brand, which the sources said could fetch nearly $3 billion, would come as Kraft Heinz looks to reshuffle its portfolio to focus on more healthy food products as weight-loss drugs weigh on demand for processed foods.

Oscar Mayer has attracted interest from several potential buyers who have submitted initial bids in recent weeks, the sources said, requesting anonymity as the discussions are confidential.

A deal is still several weeks away from being finalized if the talks are successful, the sources added.

Kraft Heinz, which has a market value of nearly $43 billion (C$59.6 billion), is hoping to command a valuation for Oscar Mayer equivalent to about 10 times its earnings before interest, taxes depreciation, and amortization of roughly $290 million (C$401.7 million), the sources said.

Kraft and JBS declined to comment. Sigma did not immediately respond to requests for comment. The Wall Street Journal reported in May that Kraft Heinz was looking to sell Oscar Mayer.

Dealmaking in the packaged food sector has been robust over the past year, as large snacking companies have grappled with lower demand due to the impact of high price inflation and weight-loss drugs.

Family-owned candy giant Mars agreed to buy Cheez-It maker Kellanova in August for nearly $36 billion (C$49.9 billion), in what was one of the biggest packaged food deals of all time. J.M. Smucker acquired Twinkies maker Hostess Brands last year for $5.6 billion (C$7.76 billion).

Under new Chief Executive Carlos Abrams-Rivera, Kraft Heinz has reorganized its brands into three separate portfolios as part of a broader effort to boost the company’s share price, which is down about four per cent this year. It has underperformed the S&P 500 Packaged Foods & Meats index, which has risen about one per cent during the same period.

Oscar Mayer and other non-core brands like cheeses and coffees are currently grouped under the Balance division at Kraft Heinz.

Founded in 1883, Oscar Mayer is an iconic brand known for its hot dogs, cold cuts and bacon. Kraft Heinz wrote down the value of its Oscar Mayer and Kraft brands by $15.4 billion (C$21.3 billion) in 2019 after being hurt by lower demand from consumers.

JBS, which is the world’s largest meatpacker, is controlled by J&F, a holding company owned by Brazilian billionaire brothers Joesley and Wesley Batista. It owns poultry company Pilgrim’s Pride and distributes several other U.S. beef brands including Swift, Certified Angus Beef, Blue Ribbon Beef and Cedar River Farms.

Sigma Alimentos is the food subsidiary of Mexican conglomerate Alfa that produces and distributes meats, cheese, yogurts, and other refrigerated and frozen foods in the Americas, Mexico, and Europe. It has distributed Oscar Mayer products in Mexico since 1993.

The post JBS, Sigma vie for Kraft Heinz’s $3 billion hot-dog business, sources say appeared first on Alberta Farmer Express.

The deal could be announced as soon as next week if talks do not fall apart, the Journal said, adding that the deal would be Hormel’s largest to date.

Planters, which mainly sells nuts and snack mixes with labels featuring its popular Mr. Peanut mascot, would be the latest addition to Hormel’s portfolio that includes chillis, frozen meats and condiments.

Sales of pantry staples surged at the beginning of the COVID-19 pandemic as consumers prepared for lockdowns, but have since waned as restrictions were lifted, leading to companies restructuring their businesses accordingly.

Kraft Heinz in September sold its natural cheese business and certain others to France’s Groupe Lactalis for US$3.2 billion, while Mondelez International bought chocolate-bar maker Hu Master Holdings last month.

Kraft and Hormel declined to comment on the report.

— Reporting for Reuters by Nivedita Balu in Bangalore.

The post Kraft Heinz reported in talks to sell Planters snack business appeared first on Alberta Farmer Express.

The U.S.-based food processing giant and the Quebec government on Nov. 17 announced the expansion plan for the company’s Mont Royal plant, which today makes products such as KD Mac + Cheese, Philadelphia cream cheese, Renee’s dressings and Kraft peanut butter.

The new ketchup line is expected to start operating in late summer of 2021 and produce over 100 million pounds of Heinz ketchup for the Canadian market within its first two years, “as production ramps up.”

The expansion is expected to add about 30 jobs at Mont Royal and help maintain about 750 more, provincial Transport Minister Chantal Rouleau said in a release from investment agency Investissement Quebec International.

Heinz ketchup sold in Canada has been made at plants in the U.S. since 2014, shortly after the company said it would shut its processing plant at Leamington, Ont., southeast of Windsor. Kraft Heinz reached a deal the following summer to sell that plant to a consortium of Ontario investors operating as Highbury Canco.

Kraft Heinz today bills itself as Highbury Canco’s largest customer, using Leamington-grown tomatoes in Heinz tomato juice and canned beans and Classico pasta sauces, among other non-ketchup goods. Kraft Heinz also still runs a tomato seed operation out of Leamington, supplying most processing-grade Heinz tomato seeds used on farms in Eastern Canada and the eastern U.S.

But the provenance of Heinz ketchup sold in Canada since 2014 has been a sore spot for some consumers, who vowed on social media to seek out rival ketchups made at plants within Canada.

“Kraft Heinz Canada is pleased to partner with the Quebec government on this investment in bringing ketchup production back to Canada from the U.S.,” Bruno Keller, president for Kraft Heinz Canada, said Nov. 17 in the company’s release.

“Through our partnership with Quebec and increased efficiencies at our Mont Royal facility, it became possible to return this iconic product back to Canada for Canadians at this time.”

Other media outlets have quoted company representatives as saying the tomatoes feeding the Montreal plant will at first continue to come from U.S. farms with which the company has contracts, though more of those tomatoes may be sourced from Canada in the future.

The Montreal plant, Keller said, “has been an important part of the Quebec economy for over six decades, and we are delighted to be able to help feed more Canadians every day thanks to investments like this one.”

The Quebec government’s hand in the project is a $2 million loan from Investissement Quebec’s ESSOR program, which offers loans, loan guarantees or financial assistance to”substantial long-term development projects” carried out within Quebec involving eligible expenditures of at least $100,000.

“With this new production line, (Kraft Heinz) is taking concrete steps to ramp up local production and continue its growth here,” Stephane Paquet, CEO of Montreal economic development agency Montreal International, said in Investissement Quebec’s release.

“This decision is proof positive that foreign subsidies too have a role to play in promoting and expanding local sourcing.”

Heinz’s relationship with Canada dates back to 1909, when Henry Heinz picked Leamington as “the most suitable site” for a pickle packing plant, the first expansion of his company’s operations outside the U.S. — Glacier FarmMedia Network

The post Kraft Heinz backed for ketchup production in Montreal appeared first on Alberta Farmer Express.

After weak sales results and several billion-dollar writedowns over the past two years, there has been market speculation about which categories Kraft Heinz will offload from its balance sheet. The company has reportedly also looked for buyers for its Maxwell House coffee business and Ore-Ida frozen potatoes brand.

Tuesday’s deal, which is expected to close in the first half of 2021, includes Kraft Heinz’s U.S. natural, grated, cultured and specialty cheese businesses — including its Breakstone’s and Cracker Barrel brands — and its grated cheese business in Canada. Kraft Heinz is also selling its international cheese unit outside of Canada and the U.S.

The Chicago-based company will retain its Philadelphia, Kraft Singles, Velveeta and Cheez Whiz brands in the U.S. and Canada. It will also keep the Kraft, Velveeta and Cracker Barrel Mac + Cheese businesses worldwide.

A banking source not involved in the deal said the shredded cheese business in the United States would likely be attractive to Lactalis, as it is “extraordinarily profitable.”

“Buying pre-shredded cheese is like giving money away,” the source said.

Lactalis, which took over Parmalat in 2011, already sells Cracker Barrel cheese in Canada, along with brands such as Black Diamond, Balderson, Amooza, P’tit Quebec, Galbani and President.

— Reporting for Reuters by Richa Naidu in Chicago and Martinne Geller in London. Includes files from Glacier FarmMedia Network staff.

The post Kraft Heinz to sell several cheese businesses to Lactalis appeared first on Alberta Farmer Express.

Speaking in a video presentation hosted by Brazilian retail brokerage XP Inc., Miguel Patricio said the affected factories, two in the U.S. and one in the U.K., are in the food service segment and saw demand drop due to the pandemic, mainly in Europe.

In a statement sent after the video, in which Patricio said the plants had been halted, Kraft said, “These facilities have significantly reduced production.”

Patricio, who took over as Kraft Heinz’s CEO last year, said its packaged food units are working in three shifts to meet high demand, especially for macaroni and cheese in the U.S. and canned beans and soups in the United Kingdom.

“We feel that people are seeking more comfort food at this moment, as they seek some other ways to feel pleasure,” Patricio said.

He said operations in China are returning to normal now, but he feels that consumers’ behaviour has changed, as individuals are using more home deliveries.

Patricio said he considers Kraft Heinz to be a “safe haven” but is worried about the effect of credit constraints on its suppliers, adding that he is looking at ways to address the issue.

The company’s shares were up 2.7 per cent on Friday even as the S+P500 slumped 1.5 per cent.

— Carolina Mandl reports on Brazil’s finance sector for Reuters from Sao Paulo.

The post Kraft Heinz cuts output at three plants, adds mac and cheese shifts appeared first on Alberta Farmer Express.

The federal Competition Bureau on Thursday said it issued a “no action letter” to the two companies and would put up a position statement detailing its reasons in the “coming days.”

The deal is expected to give Milan-based Parmalat ownership of three natural cheese brands in the Canadian market: Cracker Barrel, aMOOza! and P’tit Quebec.

That brand portfolio carries “high added value” in the Canadian market, Parmalat said in November when it announced the deal, and would allow it to leverage Cracker Barrel as a complementary brand to its own Black Diamond natural cheese.

Parmalat’s other dairy brands in Canada today include Beatrice, Lactantia, Astro and Balderson. It said in November the deal will allow it to “improve its positioning throughout Canada, with particular reference to Quebec, a region in which Parmalat Group currently has a limited penetration, and to other areas of the country in which the group is not present.”

The deal also gives Parmalat the Kraft Heinz cheese processing plant at Ingleside, Ont., about 85 km southeast of Ottawa, and its “relevant volumes of milk quotas.” The plant today employs about 400 people, who would become Parmalat staff when the deal closes.

The Competition Bureau reiterated Thursday its mandate includes reviewing mergers and acquisitions such as this one to see whether they’re likely to result in a “substantial lessening or prevention of competition.”

The bureau also noted that, for the first time in such a review since federal amendments to the Competition Act in 2009, it obtained a federal court order requiring executives of the two companies to be interviewed under oath by bureau investigators.

The bureau said its review gathered evidence and information from “key market participants” including grocery retailers, food service companies, regulators, industry associations and cheese processors.

Kraft Heinz CEO Bernardo Hees, in a separate release in November, said the deal will allow the U.S. company to “focus on the segments and categories where we have stronger brand equity, competitive advantage and greater growth prospects.”

Kraft Heinz’s cheese market space in Canada still includes brands such as Philadelphia, Cheez Whiz and Kraft Singles, made at Mount Royal, Que., where the company employs about 900 people.

Kraft Heinz, which plans to use proceeds from the deal to pay down debt, said in November the cheese business being sold produced about $560 million in net sales in 2017. — Glacier FarmMedia Network

The post Parmalat’s play for Kraft cheeses clears regulators appeared first on Alberta Farmer Express.

The company announced Nov. 6 it has a deal in hand to sell its Canadian “natural cheese” business and its cheese plant at Ingleside, Ont. to global dairy giant Parmalat for $1.62 billion.

The deal would see Kraft Heinz’s 400 employees at Ingleside, about 85 km southeast of Ottawa, transfer to Parmalat and continue to make Cracker Barrel, P’tit Quebec and aMOOza cheeses for the Canadian market.

The Canadian natural cheese business and brands produced net sales of about $560 million in 2017, Kraft Heinz said.

Parmalat is “uniquely positioned to advance the natural cheese business given their experience and focus on the dairy industry,” Kraft Heinz CEO Bernardo Hees said in a release.

“At the same time, we can focus on the segments and categories where we have stronger brand equity, competitive advantage and greater growth prospects.”

Said categories include processed cheese products such as Philadelphia, Cheez Whiz and Kraft Singles, which Kraft Heinz said it will continue to make and market in Canada at its Mount Royal, Que. facility.

Proceeds from the deal — which is expected to close in the first half of 2019, pending regulatory approvals — will go primarily to pay down debt, Kraft Heinz said. Lower interest costs are expected to offset most of the earnings-per-share dilution from the asset sale.

Milan-based Parmalat said the deal offers “strategic value” by allowing it to leverage the Cracker Barrel brand, complementing its own Black Diamond branded natural cheese brand in Canada, and to “grow in retail channels with higher added value.”

It also offers Parmalat the opportunity to improve its positioning throughout Canada, “with particular reference to Quebec, a region in which Parmalat Group currently has a limited penetration, and to other areas of the country in which the group is not present.”

Parmalat, in a market briefing note, said the deal “coupled with further planned investment” is expected to yield “synergies” with the company’s Canadian manufacturing and distribution network “which in turn could lower costs, will protect jobs and support dairy farm incomes.”

The Ingleside plant “fits well into our current network and helps expand our operations in Eastern Canada,” the company said, noting its own processing facilities in the region — at Winchester and Belleville, Ont. and at Victoriaville, Que. — “will remain open post the closing of this transaction.”

Parmalat, owned by French dairy giant Lactalis, emphasized that “each of the brands in our portfolio, and the brands we will be acquiring, will remain distinct, with its own unique consumer appeal.”

“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 the briefing note.

“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.” — Glacier FarmMedia Network

The post Parmalat to buy Kraft’s Ontario cheese plant, brands appeared first on Alberta Farmer Express.

Shares of the company, which owns brands such as Velveeta cheese and Heinz ketchup, were down nearly three per cent at $86.75 in after-hours trading on Wednesday (all figures US$).

U.S. sales, which account for about 70 per cent of Kraft’s total revenue, fell 3.5 per cent, mainly due to weak demand for its cheese, meats and nut products.

Canada sales fell 12.2 per cent in the first quarter ended April 1.

A muted spending environment in the U.S. coupled with changing consumer tastes toward fresh, organic food over processed food has forced the packaged food maker to launch new products and revamp its ready-to-eat meals to remove synthetic colors and preservatives.

Kraft, in January, had partnered with Oprah Winfrey to launch a new healthy line of packaged food called Mealtime Stories.

The company’s net sales fell 3.1 per cent to $6.36 billion, missing analysts’ average estimate of $6.45 billion, according to Thomson Reuters I/B/E/S.

Net income attributable to shareholders was $893 million, or 73 cents per share, in the first quarter, compared with $896 million, or 73 cents per share, in the year-earlier period.

Excluding certain items, Kraft earned 84 cents per share, missing analysts’ average estimate of 86 cents per share.

— Reporting for Reuters by Gayathree Ganesan in Bangalore.

The post Kraft Heinz profits miss on weak demand in Canada, U.S. appeared first on Alberta Farmer Express.

The deal, which will likely value Popeyes at more than US$1.7 billion, is a bet by Oakville, Ont.-based Restaurant Brands that it can use its international reach to introduce Popeyes’ Louisiana-style fried chicken and buttermilk biscuits to more diners globally.

It also represents a small consolation prize for Restaurant Brands shareholder 3G Capital, which lost a US$143 billion bid this week to merge its biggest holding, food conglomerate Kraft Heinz, with consumer products firm Unilever.

A deal could be announced as early as this week, the people said, asking not to be identified because the negotiations are confidential. Restaurant Brands did not respond immediately to a request for comment, while Popeyes decline to comment.

Popeyes, whose fans include pop singer Beyonce, began 45 years ago as a Southern-fried “Chicken on the Run” restaurant in a New Orleans suburb. It has since expanded to more than 2,000 restaurants, of which 1,600 are in the U.S.

In Canada, Popeyes operates about 100 outlets, nearly all in Ontario, and began expanding last fall into the Edmonton and Calgary markets.

The company has benefited from strong customer loyalty, as well as from a restaurant refurbishment program.

Chicken accounts for about 10 per cent of the fast-food industry, according to data service IBISWorld, and Popeyes’ market share is growing. The largest brands in the sector include privately held Chick-fil-A and Yum! Brands’ KFC.

Private equity firm 3G Capital, which is controlled by Brazilian billionaire Jorge Paulo Lemann, owns about 43 per cent of the voting shares in Restaurant Brands. 3G Capital has made a name by acquiring major U.S. consumer companies including Kraft Heinz.

Restaurant Brands was formed in 2014, when 3G Capital-backed Burger King acquired Canadian coffee and doughnut chain Tim Hortons Inc for US$11 billion.

3G Capital’s long-time partner, Warren Buffett’s Berkshire Hathaway, committed US$3 billion of preferred equity to finance that deal.

— Reporting for Reuters by Lauren Hirsch and Greg Roumeliotis.

The post Tim Hortons owner reported near deal to buy Popeyes appeared first on Alberta Farmer Express.

The company announced Wednesday it will shut its Richardson Foods plant at St. Marys, Ont., which makes and sells salad dressings, sauces and dessert toppings for foodservice clients, affecting 214 jobs.

The St. Marys plant and facilities at Campbell, New York; Lehigh Valley, Pennsylvania; Madison, Wisconsin; Federalsburg, Maryland; and Fullerton and San Leandro, California will close over the next 12 to 24 months, for an expected net loss of about 2,600 jobs in all.

In a “staged process” over that time, the company will shift production from those sites to other plants in North America, Kraft Heinz’s senior vice-president for corporate and government affairs, Michael Mullen, said in a statement.

Consolidating its manufacturing across its North American network is “a critical step in our plan to eliminate excess capacity and reduce operational redundancies” for Kraft Heinz, which formed this summer from the merger of Kraft Foods Group into H.J. Heinz.

The move “will make Kraft Heinz more globally competitive and accelerate the company’s future growth,” Mullen said, describing the plan as a “difficult but necessary decision (made) after thoroughly exploring extensive alternatives and options.”

The Richardson Foods plant, which has operated at St. Marys, about 35 km north of London, for over 50 years, came to Heinz in 2004, when it bought the Unifine Richardson business in Canada from Dutch processor Royal Cosun.

Jim Krushelniski, Heinz Canada’s CEO at the time, said the St. Marys plant offered “dedicated manufacturing in a state-of-the-art facility, expansion in key product and customer segments, and proven foodservice development resources that have the capability to service an increased demand for proprietary recipes.”

Richardson Foods and Heinz Canada “have had a strong and long presence in our community, and we sincerely appreciate the excellent working relationship they have had with the town,” St. Marys mayor Al Strathdee said in a separate statement Wednesday.

Strathdee said the town is “saddened” by the news of the pending closure and it’s “our sincere hope that these individuals will be able to find employment (in town) and remain a part of our community.”

Mullen said Kraft Heinz, over the next two years, will also move production from its existing Davenport, Iowa plant to a new site to be built in the Davenport area and move “part” of its cheese production from its Champaign, Illinois plant to other factories and make Champaign “a centre of excellence in dry and sauce production.” Both moves will take up to two years to complete.

Kraft Heinz in 2016 will also move its Oscar Mayer arm and its U.S. meats business unit from Madison, Wisconsin to its headquarters in Chicago, bringing 250 jobs to the Chicago area.

The moves announced Wednesday follow Kraft Heinz’s separate announcement in August it would cut about 2,500 jobs in the U.S. and Canada, including about 700 of the 1,900 positions at its Chicago headquarters.

Heinz, in the year before its merger with Kraft, also sold its tomato processing plant at Leamington, Ont. to Highbury Canco, a consortium of Ontario investors including plant managers. Heinz had said the previous fall it would shut the Leamington plant and lay off its 700-plus employees. –– AGCanada.com Network

The post Kraft Heinz to shut SW Ont. salad dressing plant appeared first on Alberta Farmer Express.