Oatly Group AB, the world’s original and largest oat drink company, and Ya YA Foods Corporation, a leading contract manufacturer of a broad range of aseptic food and beverage products, last week announced a long-term strategic hybrid partnership in North America.

In the hybrid partnership, Malmö, Sweden-based Oatly will continue to produce its proprietary oat base at both the Ogden, Utah, and Fort Worth, Texas, facilities, which will then be transferred to Ya YA Foods to be co-packed into Oatly products on-site at each location.

As part of the agreement, Toronto-based Ya YA Foods will acquire a majority of the assets (including mixing and filling equipment) used in the operation and assume the property lease at Oatly’s production facility in Ogden, and assume responsibility for the completion of construction of the production facility and the lease in Fort Worth. Oatly will retain full ownership and operation of proprietary oat base production lines in each facility.

Under the terms, Oatly will receive approximately $72 million, plus an additional credit amount toward future use of shared assets related to the Ogden facility. Oatly will also receive an additional credit towards ongoing construction at the Fort Worth location. The transaction is expected to close in the first quarter of 2023.

The announcement is part of Oatly’s shift toward an asset-light supply chain strategy to expand its hybrid production network globally to better support its growth, capacity needs and product and format innovations. The company expects this hybrid partnership to result in future capital expenditures savings and have a net positive effect on its cash flow outlook. The partnership also marks Ya YA Foods’ entry into the U.S. manufacturing market.