UPDATE 1-Canada Bread to sell sandwich business

Mon Feb 14, 2011 9:33am EST

* To sell sandwich business to Premium Brands

* Says deal to close on Feb 18

Feb 14 (Reuters) - Canada Bread said it agreed to sell its fresh prepared sandwich business to Premium Brands Holding Corp to focus on its core fresh bakery and pasta businesses.

Canada Bread, which is 90 percent owned by Maple Leaf Foods Inc , said the transaction is expected to close on Feb 18. The value of the deal was not disclosed.

The fresh prepared sandwich business, which includes production and distribution facilities in Ontario and Quebec, employs about 280 people, Canada Bread said in a statement.

Upon completion of the sale, Canada Bread and Maple Leaf will supply bakery and deli meat products for the sandwich business operations, it added.

In a separate statement, Premium Brands said the transaction is expected to have a small negative impact on its 2011 EBITDA. It also expects to incur an additional C$6 million ($6.01 mln)to C$7 million in capital and restructuring related costs.

Last month, Canada Bread had said it would close its frozen bakery facility in Laval, Quebec and take a related pretax charge of about C$5.8 million.

Shares of the Toronto-based Canada Bread closed at C$46.31, while those of Premium Brands closed at C$15.70 on Friday on the Toronto Stock Exchange. ($1 = 0.987 Canadian Dollars) (Reporting by Arnika Thakur; Editing by Prem Udayabhanu)

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