George Weston is to sell two food-processing operations and reduce its stake in its Loblaw supermarkets in order to fund its US$1.77bn acquisition of Unilever‘s Bestfoods Baking subsidiary.
Weston said it plans to concentrate the food processing division on baking activities and will sell its Neilson dairy business and the Connors Bros canned sardines and salmon aquaculture company to finance the deal to buy Bestfoods Baking division. In addition, Weston said it was considering reducing its stake in Loblaw from 63% to 58%.
“[Neilson and Connors] are being sacrificed in order for us to go forward in the baking and the supermarket business,” said chairman Galen Weston.
Weston expects the sale of the processing units to be completed this summer. Montreal-based Saputo Group, one of North America’s biggest milk processors and cheesemakers, or Italy’s Parmalat Finanziaria are likely bidders for the dairy unit.
Weston expects Bestfoods to contribute positively to earnings once the deal is completed around mid-2001, pending regulatory approval.
Galen denied speculation that Weston plans to co-operate with Associated British Foods, where Galen is a director and the Weston family has a controlling interest. The firm has an existing baked goods business in Europe that has been running for 65 years.