The owners of the Loblaw grocery chains are considering their investment options after shedding their U.S. bread and bakery business for about US$2.5 billion.
Toronto-based George Weston Ltd. on Wednesday announced it had sold its U.S. fresh bread and baked goods business to Grupo Bimbo, a Mexican firm considered one of the world’s largest baking companies.
Bimbo gets the Arnold, Brownberry, Entenmann’s, Freihofer, Stroehmann and Thomas’ brand names and a business that earned US$2.2 billion in sales in the year ended Oct. 4.
Weston said it will report a “significant gain on disposal, reflecting the value creation since the Best Foods Baking acquisition in 2001.”
Weston also said the sale “provides resources to advance business opportunities,” though it didn’t elaborate. Weston also recently closed the deal to sell its Neilson Dairy business to Saputo, on Dec. 1.
“Having sold both the dairy business and the U.S. fresh baking business at good multiples, we will sit at George Weston Ltd. with strategically well positioned companies with leading market positions in food retail and baking in Canada and a significant sum of cash,” the company said.
“We intend to use that cash wisely and at the appropriate time.”
Dunedin Holdings, the Weston subsidiary that operated the U.S. baking business, will keep its other U.S. baking interests, such as biscuit maker Interbake Foods and frozen bakery products firm Maplehurst Bakeries, Weston said.
Weston expects the sale to Bimbo to close by the end of June at the latest, pending regulatory approvals from U.S. antitrust watchdogs and approval from a majority of Grupo Bimbo shareholders.
Shareholders controlling a majority of Bimbo shares have already agreed to vote in favour of the deal, Weston said. If the deal’s financing falls through or the deal otherwise ends up incomplete, Dunedin is entitled to a US$100 million kill fee, Weston added.