Mexico's Grupo Bimbo SAB has acquired Canada Bread Company Limited for C$1.83 billion ($1.65 billion), the North American company announced on Wednesday.
Shares of Canada Bread immediately experienced a ripple effect, rising more than 7 per cent to C$72.15 on the news. Bimbo's, however, slid 1.5 per cent, down at 34.65 pesos in morning trade.
Canada's largest bakery business is owned 90 per cent by Maple Leaf Foods. With the arrangement, the latter now gets to focus on its meat business.
One of the world's largest bread makers, Grupo Bimbo will pay C$72 for Canada Bread share. The deal comes after Maple Leaf Foods announced four months ago its plans for a massive sweeping restructuring.
Grupo Bimbo effectively gains a position in the Canadian marketplace. It will now become the owner of popular brands Dempsters and Bon Matin, among others.
Moreover, the acquisition advances Grupo Bimbo's global growth strategy to extend its presence in Canada and United Kingdom, as well as to expand their distribution networks in the United States.
"Canada Bread enjoys strong relationships with key retailers in Canada and holds strong market positions in all bread categories. The company employs approximately 5,400 associates and operates 25 bakeries, as well as Canada's largest direct store delivery network for fresh bakery that reaches over 41,000 points of sale," Grupo Bimbo 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, recognized by customers and consumers for its products' high quality in the different bread categories," Daniel Servitje, Grupo Bimbo chairman and CEO, said.
The arrangement is expected to close in the second quarter of 2014, subject to regulatory approval.
Analysts expected the sell-off would be at least placed at $80 per share.
"We've got a great plan in front of us, and we're having a very rocky road in transition," CTV News quoted Michael McCain, Maple Leaf Foods president and CEO.
Maple Leaf Foods has already sold its Rothsay rendering business. Plans are underway to divest its commercial turkey farms, hatchery operation and breeding farms.
"I don't mean to minimize it, but it is transitional, and we're excited about the outcome when it's done."
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