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Mexico's Grupo Bimbo in lead to buy Canada Bread -sources

Olivia Oran and Soyoung Kim
Wednesday, 22 Jan 2014 | 10:50 AM ET

NEW YORK, Jan 22 (Reuters) - Grupo Bimbo, one of the world's largest bread makers, has emerged as the leading candidate to acquire Canada Bread Co Ltd from majority owner Maple Leaf Foods Inc, according to people familiar with the matter.

Other parties involved in the auction of the roughly C$1.8 billion ($1.64 billion) bakery company - including private equity firms KKR & Co LP and Bain Capital LLC, as well as U.S.-based Flowers Foods Inc - are no longer actively pursuing a deal, the sources said.

A purchase of Canada Bread, one of two dominant bakery companies in the country, would build on Bimbo's large U.S. acquisitions in recent years and strengthen the Mexican company's position as the top bread maker in North America.

Bimbo has expanded its U.S. footprint in recent years, acquiring Sara Lee Corp's North American bakery business for $959 million in 2010 and buying Hostess Brands Inc's Beefsteak bread brand last year.

Discussions with Bimbo are continuing and there is no guarantee that the two sides will reach a deal, the sources cautioned. It's possible other buyers will still step up, they added.

The sources asked not to be identified because details of the auction are confidential. Maple Leaf, Canada Bread, KKR and Grupo Bimbo declined to comment, while Bain did not respond to a request for comment.

Canadian food processor Maple Leaf said in October it would look to sell its 90 percent stake in Toronto-based Canada Bread. Royal Bank of Canada and Centerview Partners LLC are working on the sale.

A maker of bread, rolls, bagels and sweet goods, Canada Bread competes with another large food producer, George Weston Ltd, in its home market.

Maple Leaf, one of Canada's top food processors, has been selling parts of its businesses in an attempt to restructure under a multi-year plan. The company's board came under fire a few years ago from activist investor West Face Capital, which criticized Maple Leaf's corporate governance.

In August 2013, Maple Leaf sold its rendering business, Rothsay, to Darling International Inc for C$645 million. Canada Bread also said late last year that it would sell its fresh pasta business, Olivieri, to Spain's Ebro Foods SA for C$120 million.