Three-month stock chart for George Weston Ltd.

George Weston Ltd. has sold its U.S. fresh baked goods division to Mexico's Grupo Bimbo for $2.5 billion US, the Canadian food giant announced Wednesday.

Weston, which owns a large chunk of Loblaw Companies Ltd. and George Weston Bakeries Inc., said it sold a portion of its American operations, which includes such brands as Entenmann's, to concentrate on its Canadian holdings.

Dunedin, the Weston subsidiary that actually owns the assets, will retain its other U.S. baking interests — Interbake Foods, which produces biscuits, cookies, cones and wafers, and Maplehurst Bakeries, which produces and distributes frozen bakery products, Weston said.

"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," said company chairman and president Galen Weston Sr.

"We intend to use that cash wisely and at the appropriate time."

The deal is a mostly cash transaction, with $125 million of the purchase price in the form of interest-bearing securities.

Weston noted that sales from its fresh bread and baked goods division in the United States totalled $2.2 billion for the 52 weeks ended Oct. 4.

The business contributed $275 million to Weston's earnings before interest, taxes, depreciation and amortization over the same period.

Some experts have speculated that Weston is interested in using the extra cash to buy up the remaining public stake in Loblaw, a move which would simplify the organization's management structure.