Maple Leaf looks to Bimbo, private equity for Canada Bread sale

Reuters

By Greg Roumeliotis and Olivia Oran

Oct 25 (Reuters) - Maple Leaf Foods Inc haslaunched an auction for its bakery company Canada Bread, targeting Grupo Bimbo, one of the world'slargest bread makers, as well as private equity, several peoplefamiliar with the matter said.

Canadian food processor Maple Leaf said on Monday it wouldexplore selling its 90 percent stake in Toronto-based CanadaBread, a global company with a C$1.75 billion ($1.68 billion)market value, in a review process that is expected to becompleted by early 2014.

Since then, Royal Bank of Canada and CenterviewPartners LLC, which are handling the auction, have made initialcontact with prospective buyers before sending out detailedfinancial information, the sources said this week.

Those contacted include Mexico's Bimbo as well as some ofthe world's largest private equity firms, including KKR & Co LP and Apollo Global Management LLC, the sourcessaid, although it remained to be seen whether they would submitan offer.

The people asked not to be identified because details of theauction are confidential. Maple Leaf, Canada Bread, KKR andApollo declined to comment. Royal Bank of Canada and Centerviewdid not respond to requests for comment.

A maker of bread, rolls, bagels and sweet goods, CanadaBread is one of two dominant Canadian bakers, along with foodproducer George Weston Ltd.

To find a strategic buyer, Maple Leaf would likely have togo outside Canada to avoid competition concerns, Maple LeafChief Executive Michael McCain said this week, a move that willeventually require the approval of the Canadian government.

South of the Canadian border, the U.S. bakery industry isdominated by Flowers Foods Inc and Bimbo.

In the event of a sale of Canada Bread, Maple Leaf has saidit would use the proceeds to pay down debt, reinvest in itsbusiness and return capital to shareholders.

Maple Leaf, one of Canada's largest food processors, hasbeen focused on selling parts of its businesses in an attempt torestructure under a multi-year plan.

The auction for Canada Bread comes three years after thecompany's board came under fire from activist investor West FaceCapital, which criticized Maple Leaf's corporate governance.

In August, Maple Leaf inked a deal to sell its renderingbusiness Rothsay to Darling International Inc for C$645million. Canada Bread also said earlier this week that it wouldsell its fresh pasta business Olivieri to Spain's Ebro Foods SA for C$120 million.

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