Maple Leaf sells to Grupo Bimbo | Company sheds Dempsters and other bread lines to focus on meat business
TORONTO (Reuters) — Mexico’s Grupo Bimbo will buy the Canada Bread Co. for $1.83 billion, allowing the Canadian company’s parent, Maple Leaf Foods, to focus on its meat products business.
Grupo Bimbo, one of the world’s largest bread makers, will pay $72 for each share of Canada Bread, a seven percent premium to the Canadian company’s closing price on the Toronto Stock Exchange Feb. 11.
The purchase builds on Grupo Bimbo’s large U.S. acquisitions in recent years and strengthens its position as a top bread maker in North America.
Bimbo has expanded its footprint in recent years, acquiring Sara Lee Corp.’s North American bakery business for $959 million in 2010 and buying Hostess Brands’ Beefsteak bread in 2013.
This is Bimbo’s biggest purchase since the Sara Lee deal.
The family owned company said it will finance the purchase with cash and by using long-term credit lines that it already has in place.
Canada Bread is one of two dominant Canadian bakers, along with food producer George Weston Ltd., parent of the Loblaw grocery chain. It sells products under the Dempsters, Ben’s, POM and Sunmaid brands.
Maple Leaf has been selling parts of its businesses in an attempt to re-structure under a multi-year plan. It has recently been upgrading its meat operations as it seeks to boost profits and better compete with rivals in the United States.
Last August, Maple Leaf sold its rendering business, Rothsay, to Darling International Inc. for $645 million.
And late last year, Canada Bread also said it would sell its fresh pasta business, Olivieri, to Spain’s Ebro Foods SA for $120 million.
In December, following the sale of Olivieri, Canada Bread announced a special dividend of $8 per share, netting Maple Leaf a $183 million windfall, given its stake in the company.
The deal has been approved by the boards of both Grupo Bimbo and Canada Bread, and Maple Leaf has agreed to vote the shares it controls in favour of the deal.
The transaction still awaits regulatory anti-trust and foreign investment regulatory approvals.
Bimbo was founded in Mexico City in 1945 by Lorenzo Servitje.