TORONTO — FGF Brands Inc., which describes itself as “a technology company that bakes,” has reached an agreement to acquire the Weston Foods fresh and frozen bakery businesses of George Weston Ltd. for $1.2 billion. The purchase price represents approximately a 10x multiple on the 2021 estimated EBITDA of the Weston Foods fresh and frozen bakery business.

Weston Foods fresh and frozen bakery businesses serve retail and foodservice customers with packaged fresh bread and rolls as well as frozen and artisan bread and rolls, cakes, donuts, pies and alternatives throughout Canada and the United States. The company produces private label products and many well-known brands, including Wonder, Ace Bakery, Country Harvest, D’Italiano, Casa Mendosa, Dave’s Killer Bread and Gadoua.

FGF’s acquisition includes the fresh and frozen bakery businesses that comprised approximately 75% of Weston Foods’ net sales in 2020 and does not include cookies, cones, crackers and wafers, which George Weston said it continues to be committed to selling.

“We are thrilled to be acquiring the fresh and frozen businesses of Weston Foods, a Canadian company with over 100 years of baking experience,” said Tejus Ajmera, co-founder of FGF. “And we look forward to building on that legacy by investing in people, facilities, and innovation across our entire operations, in collaboration with Weston Foods president Luc Mongeau and his team.”

Ojus Ajmera, co-founder of FGF, added, “FGF remains a startup at heart, and this acquisition allows us to bring that same drive for disruption to more teams, brands, and customers than ever before, as we pursue our vision to become the world’s greatest baker.”

Founded in 2004, FGF Brands is a Canadian, family-owned baking company that combines innovations in robotics, AI systems and supply chain solutions with a commitment to making quality food with the cleanest possible ingredients. FGF’s include naan, flatbread, pizza crusts, muffins, sliced cakes, whole loaves, croissants and Danishes sold under multiple brands, including Stonefire Authentic Flatbreads and Simple Joys Bakery, manufactured in bakery locations across Canada and the United States.

For George Weston, the transaction comes seven months after the company announced its intent to sell its bakery segment to focus on its retail and real estate businesses. The company spent much of 2020 exploring ways to create a step change in Weston Foods’ scale that would allow it to become a more meaningful part of George Weston’s value but ultimately could not find the right opportunity, leading to the decision to part with the business.

“The Weston Foods business has been the foundation for the Weston Group in Canada since its establishment in 1882, and the decision to sell it was a difficult one,” said Galen G. Weston, the company’s chairman and chief executive officer. “However, we are pleased that the purchaser of the fresh and frozen businesses is FGF, another long-standing family business with a strong presence in bakery and a significant footprint in Canada. With FGF as the new owner, the business will be in good hands.”

George Weston said it expects to return the net proceeds from the transaction to shareholders through share repurchases over time. In the interim, the company said it is committed to ensuring that a smooth transition plan is in place as Weston Foods continues to support its customers and workforce.

The decision to sell Weston Foods comes a little more than 12 years after Dunedin Holdings, a subsidiary of George Weston, sold its US fresh bread and baked foods business to Grupo Bimbo SAB de CV for $2.5 billion. The transaction in 2009 included the Arnold, Brownberry, Entenmann’s, Freihofer, Stroehmann and Thomas’ brand names in the United States. The transaction did not include Interbake Foods, which produces biscuits, cookies, cones and wafers, or Maplehurst Bakeries, which produces and distributes frozen bakery products.

A year later, Weston added back on to its North American baking business with the acquisition of Ace Bakery Ltd., a baker of frozen artisan and European-style rustic bread.