The Globe and Mail – Mexico’s Grupo Bimbo is paying $1.83-billion for Canada Bread Co. Ltd., the bakery division of Maple Leaf Foods Inc.
Maple Leaf said last year it was reviewing options for its 90-per-cent owned bakery division, including a sale of the company whose sales have been falling. Publicly traded Canada Bread’s brands include Dempster’s, Sunshine and Villagio, as well as a line of frozen baked goods.
Michael McCain, Maple Leaf Foods chief executive officer, said the deal lets the company focus on its packaged meats business while maximizing its investment in Canada Bread.
The $72-per-share price is slightly higher than Canada Bread’s most recent close of $67.26 on the Toronto Stock Exchange.
“This is an excellent outcome for our bakery businesses and shareholders,” said Richard Lan, Canada Bread’s president and CEO. “Becoming part of Grupo Bimbo, the world’s leading bakery company and benefiting from its focus, expertise and resources, will create new opportunities for our people, customers and business partners.”
Canada Bread employs 5,400 people in Canada, the United States and United Kingdom and had 2013 estimated sales of $1.6-billion. Its Canadian operations are focused on fresh products from 22 bakeries.
Sales of Canada Bread’s frozen food have fallen by almost 5 per cent over the past three years while fresh goods have slipped by almost 2 per cent.
Bimbo is based in Mexico City has 144 plants in 19 countries, including Mexico, Latin and South America, the United States, Europe and Asia.
“Grupo Bimbo is an excellent company with strong values and a global leadership position, with little overlap in our geographic markets,” said McCain, who owns 33 per cent of Maple Leaf Foods. “This makes for a highly complementary fit with our bakery operations and is expected to provide exciting opportunities for Canada Bread employees, customers and other business partners.”
Maple Leaf Foods, whose brands include Shopsy’s and Schneiders prepared meats, is nearing the end of a five-year, $575-million restructuring in which it has closed old plants and opened new ones and streamlined its distribution system. It has also sold its Olivieri pasta business, a meat rendering company and a turkey farming operation.
The agreement is subject to approval under Canada’s Competition Act and Investment Canada Act, in addition to U.S. laws.