The Kraft Heinz Co., based in Pittsburgh and Chicago, said it entered into a definitive agreement to sell its Canadian natural cheese business to Italian company Parmalat for a purchase price of $1.62 billion CAD (approximately $1.23 billion USD). The agreement includes the sale of natural cheese brands Cracker Barrel, P’tit Quebec and aMOOza! in the Canadian market. The proposed transaction is expected to close in the first half of 2019, subject to regulatory review and approval.

“We’re excited about what this transaction means for our future growth and business in Canada,” said Bernardo Hees, CEO of Kraft Heinz. “We also believe Parmalat is uniquely positioned to advance the natural cheese business, given their experience and focus on the dairy industry. At the same time, we can focus on the segments and categories where we have stronger brand equity, competitive advantage and greater growth prospects.”

Under the terms of the agreement, Kraft Heinz said it will sell its production facility located in Ingleside, Ontario. Kraft Heinz Canada will also transfer approximately 400 employees from that facility to Parmalat.

Kraft Heinz will continue to own and market its other cheese products, including Philadelphia, Cheez Whiz and Kraft Singles, which are processed in Mount Royal, Quebec, where Kraft Heinz Canada employs approximately 900 employees. Kraft Heinz said it remains steadfast in its commitment to the Canadian market, illustrated by its recent acquisition of the Vancouver-based Ethical Bean coffee brand. Across Canada, Kraft Heinz currently employs approximately 2,000 employees in its facilities and thousands more, indirectly, through its co-manufacturers.

The natural cheese business being sold contributed approximately $560 million CAD (approximately $427 million USD) to Kraft Heinz’s net sales in 2017. The company said it expects to use transaction proceeds primarily to pay down debt, with reduced interest expenses expected to offset the majority of EPS dilution on a run-rate basis.

Parmalat Canada, Toronto, directly employs 3,000 Canadians, Kraft Heinz noted.