UPDATE 3-Canada Bread rises on news Grupo Bimbo to buy it for $1.7 bln

Wed Feb 12, 2014 12:45pm EST
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(Adds Maple Leaf CEO interview, Grupo Bimbo and investor comments)

By Euan Rocha and Rod Nickel

TORONTO/WINNIPEG, Manitoba Feb 12 (Reuters) - Mexico's Grupo Bimbo will buy Canada Bread Company for C$1.83 billion ($1.66 billion) in cash, Canada Bread said on Wednesday, allowing the Canadian company's parent Maple Leaf Foods to focus on its meat business.

Grupo Bimbo, one of the world's largest bread makers, will pay C$72 for each share of Canada Bread, a 7 percent premium to the Canadian company's closing price on the Toronto Stock Exchange on Tuesday.

The purchase builds on Grupo Bimbo's large U.S. acquisitions in recent years and strengthens its position as a top breadmaker in North America.

Bimbo has expanded its footprint in recent years, acquiring Sara Lee Corp's North American bakery business for $959 million in 2010 and buying Hostess Brands' Beefsteak bread in 2013.

Shares of Canada Bread rose 7.3 percent to C$72.14 in afternoon trading on the Toronto Stock Exchange, with the stock having surged 22 percent since October, when food processor Maple Leaf said it was mulling the sale of its 90 percent stake in the company. Maple Leaf shares dipped 0.6 percent to C$15.75, while Grupo Bimbo slipped 1.5 percent to 34.65 pesos in Mexico trading.

In January, Reuters reported that Grupo Bimbo was the top candidate to buy Canada Bread, after private equity firms KKR & Co and Bain Capital LLC, and U.S.-based Flowers Foods Inc - bowed out of the race.   Continued...