Weston aims to be major U.S. baker

Weston said he is confident the combined company will become “the undisputed leader in North America.”

The Toronto Star
May 10, 2001

Weston aims to be major U.S. baker
Soo Kim

George Weston Ltd., Canada’s largest food retailer and processor, is determined to become a powerhouse in the United States in the baking business.

Chairman Galen Weston told shareholders yesterday that the recent acquisition of Bestfoods Baking Co. from Unilever NV was “our most significant and exciting venture ever,” and heralded a new era for the Toronto-based company.

Weston said he is confident the combined company will become “the undisputed leader in North America.”

The $2.7 billion deal, reached Feb. 19, is expected to close by mid-year, subject to regulatory approval in the United States. It would make Weston one of the biggest bakers on the continent.

To help finance the purchase, the company intends to divest itself of its dairy and fish-processing operations. In addition, the company is considering reducing its 63 per cent majority interest in Loblaw Cos. Ltd. by about 5 per cent.

“We paid the full price for these assets, but we bought the best in the industry in the largest and most desirable market anywhere,” Weston told shareholders.

Richard Currie, Weston present, added: “I expect that in a few years time, someone will be standing up here telling you that the earnings per share of George Weston Ltd. are about equally divided between the earnings per share derived from Loblaw Cos. and the earnings per share coming from baking.”

The food distribution arm of the company, which includes the grocery giant Loblaw, now brings in more than 85 per cent of all sales. It also includes No Frills, Provigo and Zehrs.

During the annual meeting at the Metro Convention Centre, the company reported profit for the three months ended March 24 of $75 million, or 57 cents a share, up from $72 million, or 55 cents a share, a year earlier.

“The outlook for 2001 is positive, with good sales and earnings increases expected, driven by continued organic growth in Loblaw Cos., and the opportunity to significantly increase our position in the bakery industry in the United States,” Weston said in a statement.

Sales climbed 6 per cent to $5.1 billion in the quarter from $4.8 billion a year earlier.

Operating income rose to $235 million from $195 million (up 20.5 per cent).

Shares of Weston rose $1.15 to close at $91 on the Toronto Stock Exchange.

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