Maple Leaf Foods plans to sell bakery business
Shares in Maple Leaf Foods soared Monday after the company announced it's looking at the options for its bakery business, which could include a sale of its 90-per cent interest in Canada Bread (TSX:CBY).
Based on recent stock market prices, Canada Bread had a value of about $1.6 billion prior to the announcement Monday — accounting for more than half of Maple Leaf's overall worth.
Shares of Maple Leaf Foods, one of Canada's largest food processors, gained $1.42 or about 11 per cent to trade at $14.72 in the morning. Canada Bread shares gained $5.40 or about nine per cent to trade at $66.65.
"We are confident that our bakery business can deliver significantly higher levels of profitable growth; the only question is how best to realize the future value of this business," said Michael McCain, Maple Leaf's president and CEO in a statement.
"This process gives us the opportunity to determine the best path forward for Maple Leaf, our shareholders and our bakery business."
The Canada Bread transaction is expected to be completed in early 2014, subject to approvals.
Canada Bread has set up a special committee of directors to ensure that all shareholders are treated fairly.
The anticipated sale of Canada's largest bakery business is part a multi-year restructuring effort, which Maple Leaf expects to complete in 2015.
The company, which had a wide variety of meat processing operations in addition to the bakery business, has recently sold its Rothsay rendering business to Darling International, a Texas-based business.
Maple Leaf also agreed in the summer to sell its commercial turkey farms, hatchery operation and breeding farms to two Ontario-based companies.
Canada Bread, a publicly traded subsidiary, has also been downsizing. It announced in January that it would shut two factories — in Brad Falls, N.B., and Edmonton. The two operations had a total of 121 jobs.