Consumer Advise: Canada Bread Buys Saputo Bakery for $120M

By @ibtimesau on
Conservative leader and Canada's Prime Minister Stephen Harper and his wife Laureen glaze hot cross buns during a campaign stop at a bakery in Mississauga, Ontario April 23, 2011. Canadians will head to the polls in a federal election on May 2. REUTE
Conservative leader and Canada's Prime Minister Stephen Harper and his wife Laureen glaze hot cross buns during a campaign stop at a bakery in Mississauga, Ontario April 23, 2011. Canadians will head to the polls in a federal election on May 2. REUTERS/Chris Wattie REUTERS/Chris Wattie

Canada Bread Co., Ltd., a subsidiary of Mexico's Grupo Bimbo SAB de CV, has bought Montreal-based Saputo's bakery division for C$120 million ($103.38 million). Saputo is the establishment that makes Joe Louis and May West snack cakes.

The transaction, expected to close in February 2015, is still subject to the usual conditions, including approval by the Canadian Competition Bureau. Saputo is Canada's largest manufacturer of snack-cakes. Some of it are also sold in the U.S. Its bakery in Quebec, with 642 people, produces products under the Vachon brand.

Jean Luc Breton, senior vice-president of supply chain at Canada Bread, said the deal perfectly fits Canada Bread's plan to enter new food categories as it gears to become more competitive. "We are proud to acquire Vachon, the leading snack cake brand in Canada, and add their great brands to our other market leaders like Dempster's and POM," Breton told CBC News. "It clearly demonstrates our commitment to win in the market every day by delighting consumers."

Sylvia Sicuso, spokeswoman of Canada Bread, said Saputo's Quebec facility will maintain its operations and operate as is. "The business will run as an independent business unit of Canada Bread," Sicuso said. "Nothing will change. It will continue to operate as it does today." Saputo's bakery division earned approximately $139 million in revenues in fiscal 2014, representing less than two percent of Saputo's consolidated revenues.

Aside from Vachon, Saputo Bakery's other products include Jos Louis®, Ah Caramel®, Passion Flakie® and May West®, among others. Bimbo said it expects its new acquisition to generate annual sales of over C$130 million ($111.87 million).

Melanie Beauchesne, spokeswoman of Canada's Competition Bureau, told Reuters they cannot yet if the bureau will indeed review and examine the Saputo deal. She said the bureau generally must first be given an advance notice of proposed transactions but only when assets in Canada, or revenues of the target Canadian firm, exceed C$82 million.

Canada Bread, acquired by Grupo Bimbo since May 2014, operates 16 bakeries and employs approximately 3,800 associates across Canada. It distributes its products through a network of more than 1,000 routes operated by franchisees, distributors and some corporate associates.