Grupo Bimbo to take over Maple Leaf’s bakery unit for C$1.8bn

Mexican baking company Grupo Bimbo has signed a deal to take over Maple Leaf Foods’ bakery business, Canada Bread, in an all-cash deal of more than C$1.8bn.

The transaction allows Maple Leaf Foods, which holds 90% of the bread unit, to focus on its meat products business.

As per the agreed terms, Grupo Bimbo will pay C$72 per share to Canada Bread shareholders, a 7% premium to the latter’s closing price on 11 February.

The Mexican firm plans to back the transaction through cash holdings and financing available under its existing long-term committed credit facilities.

The acquisition will pave the way for Grupo Bimbo to strengthen its presence in Canada and the UK as well as expand its distribution network in the US.

Grupo Bimbo chairman and CEO Daniel Servitje said, "We are very pleased to announce the acquisition of Canada Bread for Grupo Bimbo, given it’s a company with a strong commercial presence, recognised by customers and consumers for its product’s high quality in the different bread categories; values and commitment, ranging from the hand of our group."

Subject to the receipt of regulatory approvals and certain closing conditions, the deal is expected to be wrapped up in the second quarter of 2014.

Canada Bread produces and markets flour-based products, including bread, rolls, bagels, and frozen partially baked or par-baked breads and bagels, and has a workforce of around 5,400 associates across its 25 bakery sites.

Maple Leaf Foods will receive around C$1.65bn in gross proceeds; it expects costs associated with the transaction to be around C$160m.

The company is currently in the final phase of a strategy to increase productivity and profitability of its prepared meats business through a low-cost, efficient manufacturing and distribution network.