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Saputo to sell Canada's largest producer of snack cakes to Mexican food giant

Tags: Saputo

Mexican food giant Grupo Bimbo SAB is adding to its menu of Canadian baked goods with the purchase of Saputo Bakery Inc., maker of Vachon’s Jos Louis and May West snack cakes.

Bimbo said on Thursday it will pay $120-million for the bakery division of Saputo Inc., marking the second Canadian deal for the world’s largest baker, which paid $1.8-billion for Canada Bread this year.

The Saputo bakery sale recasts parent Saputo Inc. as a pure-play dairy company, with more than 12,000 employees at 55 plants, including 24 in Canada, 26 in the United States, two in Argentina and two in Australia.

Sales of the sugar-laden Vachon snack cakes have been slumping as Quebeckers have turned to healthier fare. Saputo blamed poor sales of the treats in 2012 when it took a $125-million writedown. It bought the Vachon line of cream-filled and chocolate-covered treats in 1999 for $283-million, but later questioned the move as sales fell.

Founded in 1923 by Joseph-Arcade Vachon and wife Rose-Anna Giroux, Vachon has deep roots in Quebec. The once-popular Jos. Louis cake is named for the founders’ sons, Joseph and Louis.

This year, Saputo (SAP.TO) jumped into the Australian milk market with the $450-million purchase of Warrnambool Cheese & Butter, the country’s oldest dairy.

Saputo Inc. was founded in the 1950s by the Saputo family. The company, which has sales of about $10-billion a year, makes several kinds of cheese, milk and dairy products.

The all-cash deal for Saputo Bakery is expected to close in February, and is subject to approvals.

Bimbo’s other Canadian property, Canada Bread, is the former baking division of Maple Leaf Foods Inc., and makes Dempster’s bread and other brands at 16 factories across Canada.

The Canada Bread deal gave Bimbo 43 per cent of the Canadian bread market. The company cemented its status as the largest baker in the United States with the 2009 purchase of George Weston Ltd.’s U.S. division, and Sara Lee Corp.’s North American bakery operations in 2011.

Bimbo has 168 factories in 22 countries. Saputo Bakery employs more than 640 people at its plant in Montreal.

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