Grupo Bimbo to Buy Canada Bread Company for USD 1.66 Billion

Grupo Bimbo, one of the world’s largest bread makers, will acquire Canada Bread Company for USD 1.66 bn, further expanding outside of its Mexican home market and strengthening its position as a top bread maker in North America.

This will allow the Canadian company’s parent Maple Leaf Foods to focus on its meat products business, according to Canada Bread.

The Mexican baker will pay USD 65.5 for one share of Canada Bread, a 7 percent premium to the closing price on the Toronto Stock Exchange on Tuesday, Reuters reports. Grupo Bimbo has expanded its footprint in recent years, acquiring Sara Lee Corp’s North American bakery business for USD 959 million in 2010 and buying Hostess Brands’ Beefsteak bread in 2013.

This is the company’s biggest purchase since it bought Sara Lee’s North American bread business. The family-owned and operated bread maker 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 main Canadian bakers, along with food producer George Weston Ltd. In addition to bread sold under the Dempsters brand, Canada Bread sells other products under banners such as Ben’s, POM and Sunmaid.

Steps towards the Sale

Maple Leaf has been selling parts of its businesses in an attempt to restructure under a multi-year plan, according to Reuters. 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 USD 587 million. At the end of last year, Canada Bread also said it would sell its fresh pasta business, Olivieri, to Spain’s Ebro Foods SA for close to USD 110 million.

The deal announced on February 12 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. Currently, the transaction awaits regulatory anti-trust and foreign investment approvals.

“Canada Bread brings experience in the frozen bakery business that really enables us to expand our North American offering.” Daniel Servitje

Grupo Bimbo was founded in Mexico City back in 1945 by Lorenzo Servitje. Its current CEO, Daniel Servitje, is a descendant of the founder. The Servitje families own about 50 percent of the company’s stock. “We see the Canadian bread market as a very compelling opportunity,” said Daniel Servitje, quoted by Bloomberg.