Premium Brands to buy Canada Bread sandwich unit

by Eric Schroeder
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TORONTO — Premium Brands Holding Corp., a producer, marketer and distributor of specialty branded consumer food products, has agreed to acquire the fresh prepared sandwich business of Canada Bread Co., Ltd. Financial terms of the transaction, which is expected to close on Feb. 18, were not disclosed.

The fresh prepared sandwich business will operate under the name Les Aliments Deli Chef. It includes three facilities: a production facility in Etobicoke, Ont., and another in Gatineau, Que., as well as a distribution centre in Laval, Que. The fresh prepared sandwich business and distribution network services customers, including grocery, convenience, gas station and other retail outlets, throughout Ontario and Quebec.

Upon completion of the sale, Premium Brands said it will maintain a strong relationship with Canada Bread and Maple Leaf Consumer Foods, which will supply bakery and deli meat products for the sandwich business operations.

“This transaction provides us with the manufacturing and distribution infrastructure needed to accelerate our growth into eastern Canada and moves us closer to our goal of building North America’s leading prepackaged sandwich manufacturing platform,” said George Paleologou, president and chief executive officer of Premium Brands. “Furthermore, it strengthens our competitive position across Canada by expanding our family of specialty brands; providing us with a proprietary D.S.D. (direct-store delivery) network in eastern Canada that complements our D.S.D. network in western Canada; and positioning us to provide national sandwich programs to both convenience store and grocery retailers.”

Premium Brands said the transaction is expected to have a small negative impact on its EBITDA in 2011 as it repositions Les Aliments Deli Chef for future sustainable growth. In addition, the company expects to incur $6 million to $7 million in capital and restructuring related costs.

“Our objective is for Les Aliments Deli Chef to be generating annual sales and EBITDA of $50 million and $5 million, respectively, within the next five years,” Mr. Paleologou said.

Richard Lan, president and c.e.o. of Canada Bread, said the sale of the prepackaged sandwich business will allow Canada Bread “to concentrate our resources and management focus on growth in our core fresh bakery and pasta businesses. We will also benefit from an ongoing supplier relationship with Premium Brands.”

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