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Kraft Heinz Reportedly Looking To Sell Breakstone's Brand

Kraft Heinz Reportedly Looking To Sell Breakstone's Brand

Food giant Kraft Heinz Co (NASDAQ: KHC) is reportedly looking to sell its Breakstone's business, which includes cottage cheese, butter and sour cream items, CNBC reported Tuesday. 

What Happened

Sources close to the matter told CNBC that Kraft hired advisors at Royal Bank of Canada to conduct strategic reviews for the business, including a potential sale, according to the cable TV network. The decision to seek out potential buyers is consistent with a broader review of the entire Kraft Heinz dairy business.

The Breakstone's business accounts for $400 million in revenue and $50 million in EBITDA and could fetch a price tag of around $400 million in a potential sale, the sources also told CNBC. Rival dairy companies including Dean Foods Co (NYSE: DF) or Canada-based Saputo could be interested in a potential acquisition.

Why It's Important

Kraft Heinz has been actively selling off business units over the years. Last year, the company sold its Canada-based natural cheese business to Italian dairy group Carmalat for around $1.2 billion. More recently, Kraft is reportedly looking to sell its Maxwell House coffee business.

A potential sale of Breakstone's comes at a time when dairy sales across the U.S. remain weak, CNBC said. American consumers are opting for non-dairy alternatives including oat, soy and almond milk. Also, milk is in a multiyear period of weak prices.  

What's Next

Kraft is looking to monetize some of its food assets ahead of a $3-billion debt financing due in 2020 which may have to be refinanced, CNBC said. The company's leverage stands at around four times EBITDA and management may be looking to target a leverage of three times EBITDA.

Related Links:

Morgan Stanley Upgrades Kraft Heinz, Boosts Stock

Credit Suisse: Kraft Heinz Could Be Facing 'Serious' Balance Sheet Issue


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