The sale includes the assets of the Cookies, Crackers, Cones and Wafers Division of Weston Foods, along with six North American bakery facilities in South Dakota, Virginia, Ohio, Pennsylvania and Ontario, expanding Hearthside’s network to 43 production facilities in the US, Canada and Europe.
The Illinois-headquartered contract manufacturer has a 12,000-strong workforce specialising in four primary production categories, including bakery; nutrition bars and snacks; fresh and frozen sandwiches and entrees; and food packaging. The Weston acquisition adds new capacity and an expanded base of retail and food service customers in Canada and the US.
“The Weston acquisition is an ideal complement to our existing production network and business, bringing baking capacity, a roster of premier customers, expanded capabilities, and enhanced geographic coverage,” said Hearthside CEO Chuck Metzger.
“These synergies benefit our current and new customers alike. We look forward to welcoming Weston’s 1,100 employees into the Hearthside family.”
Chasing ‘the right value’
George Weston announced plans to divest its bakery business in March after “exhaustive” efforts to scale it up through acquisitions.
The bakery business represents less than 10% of the company’s net asset value, according to Richard Dufresne, president and CEO of George Weston, and the sale will leave the company with its majority stake in grocery giant Loblaw Companies and a large interest in Choice Properties Real Estate Investment Trust.
“The team worked very hard over the last few years looking at many opportunities,” said Dufresne at the time.
“After reviewing all these opportunities, it became very clear that none of them was creating the right value.”
Weston Foods was founded in 1882 and produces bread, rolls and other baked goods under the brands Wonder, Dave’s Killer Bread, Ace Bakery and D’Italiano, among others, as well as private label, sold to retail and foodservice customers throughout Canada and the US. The company posted revenues of $2.1bn in 2020.
In March, Weston also announced the retirement of Loblaw president Sarah Davis, and the return of Galen G. Weston as chairman and president at Loblaw, in addition to his role as chairman and CEO at George Weston.
In October, the company reached a deal to sell its fresh and frozen bakery businesses to affiliated entities of FGF Brands for $1.2bn.
The proceeds from the sale of Weston Foods are likely to be returned to shareholders through share repurchases over time, the company said. Together with the sale of the fresh and frozen business, the sale of the ambient business represents the disposition of George Weston’s entire bakery business, for an aggregate value of $1.57bn.
“With the agreement to sell the ambient segment to Hearthside and our previously announced sale of the fresh and frozen businesses, we have two high-quality buyers that are well-positioned to carry on the proud legacy of the Weston Foods business,” said Galen G. Weston.
“With the sale of the entire bakery business, George Weston will be focused on its market-leading retail and real estate businesses going forward.”
The transaction is expected to close before the end of the first quarter of 2022, subject to regulatory approval and customary closing conditions.
Ropes & Gray LLP and Stikeman Elliott LLP acted as legal advisors to Hearthside.