George Weston puts 139-year-old bakery business up for sale
According to Richard Dufresne, president and chief financial officer, Weston Foods makes up only a small part of its overall value, representing less than 10% of the company’s net asset value.
The unit – which had sales of CA$2.1bn (US $1.7bn) last year – produces private label goods, as well as brands including Wonder, ACE Bakery, Country Harvest and D’Italiano, for customers in the retail and foodservice channels across Canada and the US.
Unlocking Weston Foods’ potential
The move comes after efforts to scale it up through acquisitions did not pan out.
“We spent last year exploring opportunities to create a step change in Weston Food’s scale that would allow it to become a truly meaningful part of GWL value,” Galen G. Weston, chairman and CEO told analysts on a conference call.
“But in the end, we did not find the right opportunity. Instead, it’s now clear that pursuing a sale represents the best way to unlock Weston Foods potential.
“As George Weston focuses its attention on Loblaw and Choice Properties, we are confident this is the right time to unlock the strategic growth potential that exists within Weston Foods through its sale.”
He noted, however, the business is a very attractive asset to the right purchaser.
“Weston Foods has been at the core of our company for 139 years. It has a strong foundation, attractive and growing margins, a robust list of customers, strong brands and a first-rate management team.”
Dufresne added, “It has scale in the bakery industry as well as a leading market position in a number of categories. We are confident this is the right time to launch a sale process.”
George Weston plans to commence the sale process ‘shortly’ and says proceeds are likely to be returned to shareholders through share repurchases over time.
The company also announced several management changes.
Loblaw president Sarah Davis is retiring and will be succeeded by Galen Weston, who will return to his role as chairman and president at Loblaw in addition to his current job as chairman and CEO at George Weston. Dufresne will expand his responsibilities to include chief financial officer of Loblaw, and Robert Sawyer has been appointed as chief operating officer.
“The sale of Weston Foods will allow me to dedicate renewed time and energy at Loblaw as we increase our momentum in both our bricks-and-mortar network, and our leadership in digital and data,” said Weston.