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George Weston Ltd. has agreed to sell its bakery business, which produces brands including Wonder Bread, ACE Bakery and Country Harvest, to Toronto-based FGF Brands Inc. for $1.2-billion.

The company – which is also the controlling shareholder of Canadian grocery giant Loblaw Cos. Ltd. – first announced its intention to sell the Weston Foods business last March to focus on its real estate holdings and retail operations.

The fresh and frozen bakery operations included in the deal announced Tuesday represented roughly 75 per cent of Weston Foods’s net sales last year. George Weston said it remains committed to selling the remainder of the business, which produces cookies, cones, crackers and wafers.

The sale involves a relatively small part of George Weston’s business, but one that provides a link to the roots of the company – and to the billionaire Weston family’s history. The family’s retail empire began in bread when George Weston bought a bread route in Toronto 139 years ago.

“The Weston Foods business has been the foundation for the Weston Group in Canada since its establishment in 1882 and the decision to sell it was a difficult one,” George Weston chairman and chief executive officer Galen G. Weston said in a statement, adding that FGF is another family business and that the operations would be “in good hands.”

FGF was founded in 2004, and owns bakery locations across Canada and the United States. The company owns brands including Stonefire Authentic Flatbreads and Simple Joys Bakery.

Weston Foods generated an operating profit of $3-million on $2.1-billion in sales in fiscal 2020. Costs related to restructuring and to the COVID-19 pandemic were a drag on profits.

Last year, Weston Foods completed a multiyear transformation plan, which included a strategic review of its operations. George Weston’s management team initially considered acquisitions to scale up Weston Foods and keep it within the company, but decided to sell the business instead.

George Weston plans to use the money from the sale for share repurchases over time, the statement said.

The deal is subject to regulatory approval, and is expected to close in early 2022.

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