MEXICO CITY — Grupo Bimbo S.A.B. de C.V., through its Canada Bread Co., Ltd., subsidiary, has reached an agreement to acquire the total shares outstanding of Saputo Bakery Inc., a subsidiary of Saputo Inc., for C$120 million ($103 million).
Saputo Bakery produces, markets and distributes mainly snack cakes in Canada, which are sold almost exclusively in the retail market under such brands as Vachon, Jos Louis, Ah Caramel, Passion Flakie and May West. It is the largest manufacturer of snack cakes in Canada and also sells, on a small scale, in the United States. The bakery division operates one manufacturing facility located in the province of Quebec and employs 642 employees. In fiscal 2014, the bakery division had approximately C$139 million in revenues and represented less than 2% of Saputo's consolidated revenues. Grupo Bimbo said it expects Saputo to generate annual sales of more than C$130 million and adjusted EBITDA of C$15.5 million.
The acquisition is expected to position Canada Bread for further growth in the country, complementing its current product portfolio, distribution network and manufacturing facilities. Headquartered in Etobicoke, Ont., Canada Bread produces and distributes packaged fresh bread and bakery products. The company operates 16 bakeries and employs approximately 3,800 people across Canada, and serves major grocery chains, retail outlets and food service operations. Canada Bread was acquired earlier this year by Grupo Bimbo in a transaction valued at $1,663 million.
For many years, Canada Bread was a competitor with Saputo in the snack cakes segment, but Canada Bread stepped back from the category with the closing of its Shawinigan, Que., bakery in May 2013. The Shawinigan bakery produced a variety of snack cakes under the Chevalier, Cadbury and Obsession brands.“We have experienced a significant decline in consumer demand for snack cakes in recent years,” Richard Lan, president and chief executive officer of Canada Bread, said at the time the Shawinigan plant closing was announced. “We are conducting a strategic review to identify category expansion opportunities. Based on the outcome of this work, there could be potential in the future to utilize this plant to support other manufacturing requirements. However, based on declining capacity utilization we have no alternative but to close the facility. We deeply regret the impact this decision has on our people and are committed to supporting their transition to new employment.”