TORONTO — Canada Bread Co., Ltd. announced it has reached an agreement to acquire Aliments Martel, Inc.

Aliments Martel is a privately held Quebec-based manufacturer and distributor of sandwiches, meals and sweet goods.

"This acquisition reinforces our strategy of accelerating top-line growth through diversification into other high growth, value-added categories," said Richard Lan, president and chief executive officer of Canada Bread. "Expansion in the sandwich market is a major part of this strategy, and Martel brings to our company a highly efficient manufacturing base, strong distribution capability, geographic reach and expertise in this growth segment of the market."

The companies expect the transaction to close by the end of January, and Canada Bread will acquire Aliments Martel for an initial purchase price of $42 million. In addition, Canada Bread may pay an earn-out of up to $23 million based on financial performance during the next three years.

"We are excited about joining a company that shares our commitment to providing customers with the highest quality products," said Raymond Martel, founder and president of Aliments Martel. "We look forward to leveraging our expanded capabilities to drive growth in the sandwich and sweet goods food markets."

Canada Bread is 88% owned by Maple Leaf Foods, and this is the second acquisition it has made in the sandwich market. In 2006, the company acquired Royal Touch Foods, a company based in Toronto that focuses on pre-packaged sandwiches.