Maple Leaf Foods reportedly drawing bids for its bread unit from Grupo Bimbo, Flowers Foods and several private-equity firms

Nevin Barich

Nevin Barich

Nov 20, 2013 – Bloomberg LP

DETROIT and TORONTO , November 20, 2013 () – Maple Leaf Foods Inc., the Canadian producer of foods from hamburgers to frozen pasta, has drawn bids for its bread unit from Grupo Bimbo SAB, Flowers Foods Inc. and several private-equity firms, three people with knowledge of the matter said.

The Toronto-based food producer, which owns 90 percent of Canada Bread Co., said in October it would explore options for the stake, including a possible sale as it divests assets to focus on its meat business. With several suitors evaluating the company, a sale is looking more likely, said one of the people, who asked not to be named because the talks are private. Maple Leaf hired Centerview Partners LLC and Royal Bank of Canada to look for buyers, the people said.

“Those are the two most logical buyers of the asset and I would be extremely surprised if they weren’t both very, very interested in it,” Brian Huen, managing partner at Red Sky Capital Management Ltd., said by phone from Toronto. Red Sky manages about C$225 million ($215 million) including Maple Leaf shares.

Once the bread business is sold, “we firmly believe that the protein business is also for sale,” Huen said, referring to Maple Leaf’s meat-processing operations.

Maple Leaf is closing plants while increasing efficiency at others as part of a seven-year restructuring plan to make its global protein business more profitable, Chief Executive Officer Michael McCain said on an investor call last month.


The CEO, a member of the family that owns Florenceville, New Brunswick-based french-fry producer McCain Foods Ltd, has been remaking Maple Leaf after 23 people died and 34 others were poisoned by contamination by listeriosis in 2008 from meat processed at a Toronto plant.

McCain owns 33 percent of Maple Leaf shares, according to data compiled by Bloomberg. Greg Boland, CEO of Toronto-based hedge fund West Face Capital Inc., accelerated Maple Leaf’s overhaul after winning a seat on the company’s board in 2011. West Face now owns 11 percent of Maple Leaf.

Maple Leaf agreed to sell its animal-rendering business to Darling International Inc. for about C$645 million in August. It also announced the sale of its commercial turkey farms and hatchery operations to Ernald Enterprises Ltd. and Cuddy Farms Ltd. respectively last quarter, for undisclosed sums.

The review for the Etobicoke, Ontario-based Canada Bread is scheduled to be completed in early 2014, Michael McCain said. Canada Bread makes fresh and frozen flour-based goods and sells them through brands including Dempster’s, Olafson’s and Olivieri, according to the company’s website.


Mike Vels, Maple Leaf’s chief financial officer, said in a phone interview on Nov. 18 that the sale effort “is a robust process.” He declined to name bidders. Monica Breton, a spokeswoman for Mexico City-based Grupo Bimbo, declined to comment while a representative for Thomasville, Georgia-based Flowers didn’t return calls seeking comment.

The baking business has earnings before interest, taxes, depreciation and amortization, or Ebitda, of $175 million, according to one of the people familiar with the situation. Maple Leaf wants as much as 10 times Ebitda, this person said, suggesting an asking price of more than $1.7 billion.

Canada Bread had a market capitalization of about $1.5 billion before Oct. 21, when Maple Leaf said it was reviewing options. The company’s stock has risen 14 percent since then through yesterday, to C$75.50 a share, giving it a market value of C$1.92 billion. The shares were unchanged at 9:46 a.m. today in Toronto.


Maple Leaf shares have jumped 39 percent in the year through yesterday, outstripping the 20 percent rise in the 11- member Standard & Poor’s/TSX Consumer Staples Index amid speculation it may also be a takeover target.

If the deal goes through Maple Leaf will be able to pay off debt, Red Sky’s Huen said.

Shuanghui International Ltd. of Hong Kong announced a C$4.7 billion deal to buy Smithfield Foods Inc. on May 29 as companies in Asia search for supply and technological expertise to feed growing middle classes in emerging markets.

Annual global protein consumption is expected to increase to 52 kilograms (115 pounds) per capita by 2030 from 40 kilograms, according to a report from Bloomberg Industries.

Maple Leaf shares fell 0.6 percent to C$16.50 in Toronto today for a market capitalization of C$2.31 billion. The shares closed at C$16.60 yesterday, the highest since May 2007.

--With assistance from Duane D. Stanford in Atlanta, Carlos Manuel Rodriguez in Mexico City and Gerrit De Vynck in Toronto. Editors: Elizabeth Wollman, Mohammed Hadi

To contact the reporter on this story: David Welch in Detroit at

To contact the editor responsible for this story: Jeffrey McCracken at

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