CANADA: Grupo Bimbo secures Canada Bread acquisition
Bimbo to take on Canada Bread
Bimbo will pay C$1.83bn (US$1.66bn), or C$72 a share, for the company. Including the C$8 per share dividend paid by Canada Bread to its shareholders last month, the company said the price represents a 31% premium on its stock price as of 18 October, the day before Maple Leaf announced it was considering strategic options for the baker.
In an announcement, Maple Leaf emphasised the agreement was the result of an "exhaustive process" to secure the best possible price for the business. US baker Flowers Foods was reportedly among the other interested parties.
Maple Leaf holds approximately 90% of Canada Bread's shares and has thrown its weight behind the deal - which would be dependent on the approval of two-thirds of shareholders.
Commenting on the agreement, Canada Bread president and CEO Richard Lan said the acquisition was an "excellent outcome" for the company. "Becoming part of Grupo Bimbo, the world's leading bakery company and benefiting from its focus, expertise and resources, will create new opportunities for our people, customers and business partners."
Grupo Bimbo to Acquire Canada Bread; Maple Leaf Foods to Support Transaction
TORONTO, Feb. 12, 2014 /CNW/ - Canada Bread Company, Limited (TSX: CBY) today announced that Grupo Bimbo, S.A.B. de C.V. of Mexico ("Grupo Bimbo") has agreed to acquire all of the issued and outstanding common shares of Canada Bread Company, Limited ("Canada Bread") for aggregate cash proceeds of $1.83 billion or $72.00 per share pursuant to an arrangement agreement (the "Arrangement Agreement") entered into between Canada Bread and Grupo Bimbo.
"This is an excellent outcome for our bakery businesses and shareholders," said Richard Lan, President and CEO. "Becoming part of Grupo Bimbo, the world's leading bakery company and benefiting from its focus, expertise and resources, will create new opportunities for our people, customers and business partners."
The Arrangement Agreement provides for the acquisition of all issued and outstanding common shares of Canada Bread pursuant to a statutory arrangement under the Business Corporations Act (Ontario) (the "Arrangement"). Under the terms of the Arrangement Agreement, Canada Bread is permitted to continue to pay quarterly dividends of up to $0.75 per share until the closing of the transaction (pro-rated for the actual number of days in the quarter in which the transaction closes). Maple Leaf Foods Inc. ("Maple Leaf"), which owns approximately 90% of the outstanding common shares of Canada Bread, has entered into a voting support agreement with Grupo Bimbo (the "Voting Support Agreement") pursuant to which Maple Leaf has agreed to vote all of its common shares of Canada Bread in favour of the Arrangement at a special meeting of shareholders of Canada Bread called to consider the transaction.
Including the $8.00 per share dividend paid by Canada Bread to its shareholders on January 6, 2014, the $72.00 in cash per common share that Canada Bread shareholders will receive under the Arrangement represents a 31% premium to Canada Bread's closing price on the Toronto Stock Exchange of $61.25 on October 18, 2013 (the day prior to Maple Leaf's announcement that it was exploring strategic alternatives for its bakery business and Canada Bread's announcement that it had established a Special Committee of its board of directors in connection therewith), and a 34% premium to the 20-day volume-weighted average share price of $59.58 ending on October 18, 2013.
This transaction follows an exhaustive process undertaken by Maple Leaf, in cooperation with the special committee of independent directors of Canada Bread, to seek to maximize the value of Canada Bread. The special committee of independent directors of Canada Bread received independent legal and financial advice and received a fairness opinion from CIBC World Markets Inc. to the effect that, as of the date of such opinion and subject to the assumptions, limitations and qualifications contained therein, the consideration to be received by Canada Bread minority shareholders pursuant to the Arrangement Agreement is fair, from a financial point of view, to such shareholders.
The Arrangement, which has been approved by the boards of directors of Canada Bread and Grupo Bimbo, will require the approval of at least 66 2/3% of the votes cast by the shareholders of Canada Bread at a special meeting expected to take place in early April 2014. Pursuant to the Voting Support Agreement, Maple Leaf has agreed to vote its 90% interest in Canada Bread in favour of the Arrangement.
The transaction is also subject to receipt of court approval, regulatory approvals (including Competition Act (Canada) and Investment Canada Act approvals and Hart Scott Rodino approvals in the United States) and other customary closing conditions. An information circular (the "Circular") outlining details of the Arrangement and Special Meeting is expected to be mailed to shareholders of Canada Bread in early March 2014. Copies of the Circular, the Arrangement Agreement and the Voting Support Agreement will be made available under Canada Bread's profile on SEDAR at www.sedar.com. Subject to the satisfaction or waiver of the conditions to the Arrangement Agreement, the transaction is expected to close in the second quarter, 2014.
Original source: Maple Leaf Foods
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