UPDATE 1-Canada's Maple Leaf explores sale of Canada Bread stake
TORONTO, Oct 21 (Reuters) - Canadian food processor Maple Leaf Foods said on Monday it was looking to possibly sell its controlling stake in Canada Bread Co, as it determines whether to exit the bakery segment and focus on its meat business.
Toronto-based Maple Leaf said it recently completed a comprehensive review of opportunities to accelerate profitable growth across its bakery business, however before committing any resources to implement this strategy, it has decided to explore strategic alternatives, including a sale of its 90 percent stake in Canada Bread.
"We are confident that our bakery business can deliver significantly higher levels of profitable growth; the only question is how best to realize the future value of this business," Maple Leaf Chief Executive Michael McCain said in a statement.
Maple Leaf's shares jumped 9.5 percent to C$14.50 in early trading on the Toronto Stock Exchange following the news, while those of Canada Bread rose 8.8 percent to C$66.65.
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 company cautioned that there could be no assurance that a sale of the business will occur. Maple Leaf expects to conclude the strategic alternatives process in early 2014.
In a separate statement, Canada Bread said it has appointed a special committee comprised of its independent directors to ensure that all of its shareholders are treated fairly and that the company's interests are taken into account during this process.
The Toronto-based company said it also engaged CIBC World Markets Inc to act as its financial adviser.
Canada Bread, in addition to bread sold under the Dempsters brand, sells pasta and other products under banners such as Olivieri, Ben's, POM and Sunmaid.
Canada Bread, which has a market capitalization of roughly C$1.56 billion ($1.52 billion), employs some 6,400 people in operations spread across Canada, the United States and Britain.