SYS-CON MEDIA Authors: Kevin Benedict, Rich Waidmann, Pat Romanski, Michael Jannery, Javier Paniza

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Grupo Bimbo to Acquire Canada Bread

TORONTO, Feb. 12, 2014 /PRNewswire/ - Maple Leaf Foods Inc. (MFI: TSX) ("Maple Leaf" or the "Company") 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. Maple Leaf currently holds approximately 90% of the outstanding shares of Canada Bread and has agreed to vote all of such shares in favour 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. "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."

Mr. McCain added, "Upon completion of our prepared meats strategy at the end of 2014, Maple Leaf intends to capitalize on its state-of-the-art network, market-leading brands and a strong balance sheet to build on our position as Canada's leading consumer packaged meats company, both within and beyond our borders."

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 has entered into a voting support agreement with Grupo Bimbo 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 to be called to consider the transaction.  Maple Leaf has also agreed to provide certain transition services at its cost to Grupo Bimbo after closing and has agreed to a non-competition covenant in favour of Grupo Bimbo in respect of the Canada Bread business.

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.

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 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 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.  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 and Investment Canada Act approvals and Hart Scott Rodino approval in the United States) and other customary closing conditions. An information circular outlining details of the Arrangement and Special Meeting is expected to be mailed to shareholders of Canada Bread in early March.  Subject to the satisfaction or waiver of the conditions to the Arrangement Agreement, the transaction is expected to close in the second quarter, 2014.

Maple Leaf is in the final phase of implementing a strategy to significantly increase productivity and profitability in its prepared meats business through establishing a low-cost, highly efficient manufacturing and distribution network. The Company has entered the peak phase of completing this strategy.   Coupled with poor protein market conditions, this network transition significantly impacted earnings in 2013 and particularly in the fourth quarter. Once execution of this strategy is completed, involving closing down six older facilities, Maple Leaf expects to realize significant benefits from increased productivity and lower overhead and operating costs. Management does not expect the sale of its interest in Canada Bread to materially affect its 2015 EBITDA margin target of 10%.

A special committee that included all of the independent directors of Maple Leaf was established to oversee the strategic review process and recommend the optimal use of proceeds to benefit both the Company and its shareholders, which will include some combination of debt repayment, supporting growth in its consumer packaged meats business and return to shareholders. Following consideration of the alternatives, the board of directors of Maple Leaf intends that the return to Maple Leaf shareholders of any available proceeds from the sale of Canada Bread within three years of the closing date of the Canada Bread transaction would be made pursuant to one or more issuer bids.  The timing, structure, price and other terms of each issuer bid will be determined by the independent directors.  In addition and in order to protect the interests of minority shareholders, any such issuer bid will comply with the terms of Multilateral Instrument 61-101, be conducted pursuant to a "Dutch Auction" and be subject to a minimum deposit condition that more than 50% of the Maple Leaf shareholders other than McCain Capital Inc. accept the issuer bid.  If it is determined that any one or more issuer bids could result in material adverse consequences to Maple Leaf and/or its shareholders, the board of directors would consider alternative means of returning proceeds to shareholders that would be intended to have the same effect.‎

Investor Conference Call Details
Maple Leaf Foods will host a conference call with the investment community today at 10:00 a.m. EST to discuss this announcement. To participate in the conference call, please call 416-340-2217 / 1-866-696-5910, Passcode 9965283. A playback will be made available following one hour after the event at 905-694-9451 / 1-800-408-3053, Passcode 1906742. If you are unable to participate, the webcast will be archived and available on the Company's website at www.mapleleaffoods.com under the Presentations & Webcasts section.

About Maple Leaf
Maple Leaf Foods Inc. is a leading food processing company, headquartered in Toronto, Canada. The Company employs approximately 19,500 people at its operations across Canada and in the United States, the United Kingdom, and Asia.

About Canada Bread
Canada Bread is a leading manufacturer and marketer of value-added flour based products, including fresh bread, rolls, bagels, and frozen partially baked or par-baked breads and bagels. Canada Bread is 90% owned by Maple Leaf and its common shares are listed on the Toronto Stock Exchange under the ticker symbol CBY.

About Grupo Bimbo
Grupo Bimbo is one of the largest baking companies in the world in terms of production and sales volume. As the market leader in the Americas, Grupo Bimbo has 144 plants and more than 1,600 distribution centers strategically located in 19 countries throughout the Americas, Europe and Asia. Its main product lines include sliced bread, buns, cookies, snack cakes, English muffins, bagels, pre-packaged foods, tortillas, salted snacks and confectionery products, among others. Grupo Bimbo produces over 10,000 products and has one of the most extensive direct distribution networks in the world, with more than 52,000 routes and more than 126,000 employees. Grupo Bimbo's shares have traded on the Mexican Stock Exchange since 1980 under the ticker symbol BIMBO.

Forward Looking Statements
This document and statements made in the above noted conference call may contain "forward-looking information" within the meaning of applicable securities law.  Such statements include, but are not limited to, expectations regarding the timing and outcome of the protein transformation strategy including the EBITDA margin targets for 2015, statements regarding the timing of the completion of the sale of Canada Bread to Grupo Bimbo as contemplated by the Arrangement Agreement and any use of proceeds flowing from such transaction.  There can be no assurances that any transaction will be completed. These statements are not guarantees of future events and involve assumptions and risks and uncertainties that are difficult to predict.  Actual results may differ materially from those expressed, implied or forecasted in such forward-looking information.  Some of the factors that could cause actual results or outcomes to differ materially from the results expressed, implied or forecasted by such forward-looking information, including some of the assumptions used in making such statements, is discussed more fully in the Company's Annual Management's Discussion and Analysis for the period ended December 31, 2012 including the section entitled "Risk Factors", that are updated each quarter in the Management's Discussion and Analysis, and are available on SEDAR at www.sedar.com. Maple Leaf does not intend to, and Maple Leaf disclaims any obligation to, update any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law. 

SOURCE Maple Leaf Foods Inc.

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