Maple Leaf Foods Considers Selling Canada Bread Stake
Maple Leaf Foods Inc. (MFI), a Canadian producer of meats and baked goods, is considering the sale of its 90 percent stake in Canada Bread Co. to focus on its protein business.
A review of options for Maple Leaf’s bakery business is expected to conclude in early 2014, Chief Executive Officer Michael McCain said today on an investor call.
“We are confident that our bakery business can deliver significantly higher levels of profitable growth,” McCain said in a statement before the call. “The only question is how best to realize the future value of this business.”
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, 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 statement.
Canada Bread, based in Etobicoke, Ontario, rose 8.5 percent to C$66.17 at 3:55 p.m. in Toronto. Maple Leaf climbed 10 percent to C$14.63 at the close, the most in 13 years.
The bakery unit will either be sold at a price that recognizes its value or Maple Leaf will keep running it, Chief Financial Officer Michael Vels said during the investor call. “We’re best suited at Maple Leaf to sell the entire business or retain it,” he said.
Maple Leaf has established a committee of independent directors to oversee the review and the use of proceeds should the stake be sold. Funds from a sale may go to debt repayment, reinvestment in the company and returning capital to shareholders, Toronto-based Maple Leaf said.
The company is working to finish modernizing and streamlining its protein business, which sells products including seasoned chicken breasts and no-preservatives cold cuts, by 2015, said McCain.
“Once that’s done we will be faced with a protein business that is in an outstanding market position in Canada,” he said.
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