Grupo Bimbo to Acquire Canada Bread For $1.8 Billion

<p>Grupo Bimbo will acquire Canada Bread Company for $1.83 billion through an arrangement agreement entered by the companies.</p>

TORONTOGrupo Bimbo will acquire Canada Bread Company for $1.83 billion through an arrangement agreement entered by the companies. Maple Leaf Foods currently holds about 90% of Canada Bread's outstanding share, and has agreed to vote all of the shares in favor of the transaction.

"This transaction maximizes the value of our investment in Canada Bread and focuses Maple Leaf on building its leadership in the consumer packaged meats business," said Michael H. McCain, president and CEO, Maple Leaf Foods. "Grupo Bimbo is an excellent company with strong values and a global leadership position, with little overlap in our geographic markets. This makes for a highly complementary fit with our bakery operations and is expected to provide exciting opportunities for Canada Bread employees, customers and other business partners."

The 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. Under the terms of the 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).

On closing, gross proceeds to Maple Leaf from its 90% ownership, excluding any dividends received, will be approximately $1.65 billion. Maple Leaf expects cash costs related to the transaction to be approximately $160 million, including make-whole and swap cost settlements on debt repayment, advisor fees and other costs.

This transaction follows an exhaustive process undertaken by Maple Leaf, in cooperation with the special committee of Canada Bread, to seek to maximize the value of Canada Bread. The board of directors of Maple Leaf has received fairness opinions from its financial advisors, RBC Capital Markets and Centerview Partners LLC, to the effect that the consideration to be received by Maple Leaf in the arrangement is fair from a financial point of view to Maple Leaf.

The arrangement, which has been approved by the boards of directors of Canada Bread and Grupo Bimbo, will require the approval of at least two-thirds of the votes cast by the shareholders of Canada Bread at a special meeting expected to take place in early April 2014. Maple Leaf has agreed to vote its 90% interest in Canada Bread in favor of the Arrangement.

The transaction is also subject to receipt of court approval, regulatory approvals in Canada and the United States. and other customary closing conditions.

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