Canada's Maple Leaf Foods explores sale of Canada Bread stake

Mon Oct 21, 2013 7:29pm EDT
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By Euan Rocha and Rod Nickel

TORONTO/WINNIPEG, Manitoba (Reuters) - Canadian food processor Maple Leaf Foods said on Monday it may sell its controlling stake in Canada Bread Company as it determines whether to exit the bakery business and focus on meat products.

Toronto-based Maple Leaf said it has recently completed a comprehensive review of opportunities to accelerate profitable growth across its bakery business. But before committing resources, it decided to explore strategic alternatives, including a sale of its 90 percent stake in Canada Bread.

"This is about a great business with a good view to help it to grow profitably over the next four or five years, but because we're at a crossroads ... we felt it was prudent to consider the alternatives," Maple Leaf Chief Executive Michael McCain said in an interview.

Maple Leaf's shares jumped 10 percent to C$14.63 by mid-afternoon on the Toronto Stock Exchange, while those of Canada Bread rose 6.4 percent to C$65.15.

In the event of a sale of the business, Maple Leaf said it would consider using the proceeds to pay down debt, reinvest in its business and return capital to shareholders.

The potential sale of its Canada Bread interest, following a deal in August to sell its rendering business, does not signal that Maple Leaf itself is for sale, McCain said.

Maple Leaf has the choice to operate an integrated business that includes the bakery, or become a protein-focused company, McCain said.

In response to an analyst's question on a conference call about whether Maple Leaf is signaling it is for sale, he said "the answer ... is a very unequivocal 'no.'"   Continued...