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UPDATE 4-Kraft Heinz to sell Planters, Corn Nuts brands to Hormel for $3.35 billion

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Richa Naidu
·2 min read
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(Adds CEO comments)

By Richa Naidu

NEW YORK, Feb 11 (Reuters) - Kraft Heinz Co said onThursday that it plans to sell its nuts business - includingmost Planters and Corn Nuts products - to Hormel Foods Corpfor $3.35 billion, sending shares up 6%.

The Chicago-based company has been trying to streamline itsportfolio and focus on more accretive brands, having facedcriticism for years about losing out to private label productsbecause it is in too many categories to focus on key brands. InSeptember, Kraft Heinz said it would sell its natural cheesebusiness to French dairy company Groupe Lactalis for $3.2billion.

"Planters is one of the brands most affected by privatelabel in our portfolio. It's also, of course, affected as acommodity," Chief Executive Miguel Patricio said in a statement.

"We must focus on areas where we see the greatestcompetitive advantage."

Patricio said in an interview with Reuters the Planters dealgives Kraft Heinz the flexibility to invest internally, makeacquisitions or pay down debt. He declined to comment on whatbrands Kraft Heinz is interested in buying but said the companyis "not in any negotiation at the moment."

Kraft Heinz's nuts business contributed about $1.1 billionto net sales in 2020.

The deal, which is expected to close in the first half of2021, includes global intellectual property rights to thebrands, subject to existing third-party licenses.

Kraft Heinz also beat analysts' estimates on Thursday forfourth-quarter revenue as people under pandemic lockdown duringthe holidays bought more packaged food products like Mac andCheese, Heinz ketchup and Oscar Meyer meat slices.

"No large-cap food company has benefited more from the COVIDera than Kraft Heinz, with strong non-promoted sales growth andmuch needed balance sheet relief," Evercore ISI analyst DavidPalmer wrote in a recent note.

Sales grew 6.2% to $6.94 billion in the three months endedDec. 26, beating the average estimate of $6.82 billion,according to Refinitiv data.

Adjusted net earnings rose to 80 cents per share from 72cents per share a year earlier, beating estimates of 74 centsper share.(Reporting by Richa Naidu in New York; editing by Jason Neelyand Steve Orlofsky)