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Maple Leaf Foods

Fred Lum

There's speculation that activist shareholder West Face Capital may push for a breakup of Maple Leaf Foods Inc.

If so, what would the meat and bakery company be worth?

Analyst Jim Durran at National Bank Financial took a crack at answering that question -- estimating that the company would be worth $16.38 a share in a breakup that leads to sales of the protein and bakery businesses. He cautions that he's "not suggesting that full-scale sale is the most likely outcome" but the scenario provides the "high watermark." He puts the chances of such a breakup at one in five.

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That's the same odds the analyst puts on management achieving its plan to improve profitability, which is based on investing in factories.

In that situation, he comes up with a valuation of $15.38 a share at the end of fiscal 2011.

West Face has been publicly silent on what it wants Maple Leaf to do, though it is believed to be communicating with the company. In the meantime, Maple Leaf's board recently unanimously endorsed a management plan to increase the bottom line.

The company releases results this week, which will give investors a taste of any progress on increasing profitability.

Mr. Durran is expecting to see margin expansion and improved profitability thanks to better performance in the meat side of the business.

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