Kraft Heinz on Tuesday said it is selling part of its cheese business to Lactalis in a $3.2 billion deal.
Breakstone's, Polly-O, Athenos, Hoffman's, Knudsen and Cracker Barrel are included in the deal, accounting for $1.8 billion in net sales over the last twelve months. Additionally, the French company will be licensing the Kraft cheese brand.
The deal is expected to close in the first half of next year and is subject to regulatory approval. Kraft Heinz will use the proceeds of the deal to pay down its debt.
Kraft Heinz CFO Paulo Basilio said that the company expects its adjusted earnings per share to be diluted by 5% as a result of the sale.
Ahead of the company's investor day, analysts had speculated that its cheese business could be on the auction block because of competition from private label brands. CNBC reported more than a year ago that the company was weighing a sale of Breakstone's sour cream and cottage cheese business.
Shares of Kraft Heinz were up 1% in morning trading as the company presented its long-term turnaround plan to investors. As its blueprint is implemented, the company is projecting long-term organic sales growth of 1% to 2% and adjusted earnings per share growth of 4% to 6%.
The stock, which has a market value of $39.5 billion, has risen less than 1% this year.