Canada’s biggest dairy processor is set to sell its baked goods business to Canada Bread for $120 million cash.
Montreal-based Saputo’s baked goods business is billed as Canada’s top producer of snack cakes, sold mainly in the Canadian retail market and “on a small scale” in the U.S.
The company’s cakes are sold under the Vachon, hop + go, Hostess and Rondeau umbrella brands, whose brand names include Vachon, Jos Louis, Ah Caramel, Passion Flakie, Granny’s, Big Daddy and May West. The deal also includes one manufacturing plant in Quebec, now employing about 640 people.
“This operation will position Canada Bread for further growth in the country, complementing its current product portfolio and its distribution and manufacturing footprint,” Canada Bread said in a release.
Etoicoke, Ont.-based Canada Bread has been owned since May by Mexican bakery giant Grupo Bimbo, which paid $1.8 billion for the former Maple Leaf Foods subsidiary.
The deal for the Saputo bakery business is expected to close in February, pending approval from the federal Competition Bureau.
Canada Bread said Thursday it expects the Saputo business to generate annual sales of over $130 million. Saputo said its bakery division produced about $139 million in revenues, less than two per cent of Saputo’s consolidated revenues, in fiscal 2014.
Saputo diversified into the baked goods business in 1999, when it bought the assets of Quebec’s Culinar, including its storied Vachon product lines. In business since 1923, Vachon renamed itself Culinar in 1977.
The bakery division expanded in 2006, when Saputo bought control of Quebec bakery firms Boulangerie Rondeau and Biscuits Rondeau. — AGCanada.com Network