Monday, February 17, 2014

News: Grupo Bimbo to take over Rotherham bagel facility in Canada Bread deal

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A deal has been struck for Mexico's Grupo Bimbo to take over Canada Bread, the company owned by Maple Leaf Foods, which operates the largest bagel production facility in Europe, based at Swinton in Rotherham.

Following an "exhaustive process" undertaken by Maple Leaf to seek to maximize the value of Canada Bread, Maple Leaf expects CAN$1.830 billion (£1 billion) for its 90% stake in a deal which has been approved by the boards of directors of Canada Bread and Grupo Bimbo, but will require the approval of the shareholders.

Grupo Bimbo said that the deal would advance its global growth strategy allowing it to extend the company's presence in Canada and United Kingdom, as well as to expand their distribution networks in the United States. Maple Leaf is expected to shift focus to its position as Canada's leading consumer packaged meats company.

Daniel Servitje, chairman and CEO of 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, recognised by customers and consumers, thanks to the high quality of its range of bakery products, its values ​​and commitment, which go hand in hand with our group."

Michael H. McCain, president and CEO of Maple Leaf, added: "Grupo Bimbo is an excellent company with strong values and a global leadership position, with little overlap in our geographic markets. 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."

Based at Swinton, the bagel production facility produces 6-7 million bagels per week for several companies including the New York Bakery Co. The Canadian parent company announced an £11.5m investment in a new production line in 2013 in response to the unprecedented success of the 2013 New York Bakery Co. bagel re-launch - which saw sales increase by 30%.

The growing Rotherham facility has an estimated production capacity of 70,000 bagels every hour and the company has expanded the Swinton Meadows site a number of times, the previous investment was in 2008 with £4m to expand its frozen bagel capacity.

A £11.5m infrastructural investment and £3m communications spend from owners, Maple Leaf Bakery UK Ltd was announced in 2011.

Canada Bread dates back to 1911, when it was formed in a merger of five different companies. In 1991 the merger of Maple Leaf Mills Limited and Canada Packers Inc. created the company now known as Maple Leaf Foods Inc., Canada's largest food processor. Four years later McCain Capital Corporation and the Ontario Teachers Pension Plan Board acquired controlling interest in the company from Hillsdown Holdings plc and remain controlling shareholders today.

Established in 1945, Grupo Bimbo is the largest Mexican-owned baking company. In 2011 it became the largest baking company in the world when it acquired Sara Lee North American Fresh Bakery, Fargo in Argentina and Bimbo Iberia in Spain and Portugal. The 300 staff in Rotherham are set to join 126,000 that Grupo Bimbo employs across 19 countries in America, Asia and Europe.

The transaction is expected to close during the second quarter of 2014, once regulatory approvals are obtained. To fund the transaction, Grupo Bimbo will utilize cash holdings and financing available under existing long-term committed credit facilities.

New York Bakery Co. website

Images: Grupo Bimbo / New York Bakery Co. / Facebook

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