Dutch food ingredients group CSM announced that it reached a deal to sell its bakery supplies business to U.S. private equity firm Rhone Capital for 850 million euros as it shifts its focus on more profitable food ingredients.

CSM is making 77% of its annual sales up for sale through the divestment of its bakery supplies operations. It plans to concentrate more on other bakery ingredients such as lactic acid, fillings, icings, emulsifiers as well as colorings and bakery flavors.

According to a spokeswoman for CSM, proceeds from the sale will be used to pay for pension liabilities, return funds to shareholders and make acquisitions.

In May 2012, CSM revealed its plan to sell bakery supplies business, which make muffins and pastries for retailers in Europe and the U.S., in response to weak consumer spending and high raw material prices. 

CSM said in statement that the sale would be completed in the third quarter this year as the deal waits for approval in the U.S. and Europe.