TORONTO - The largest shareholder of Maple Leaf Foods is reducing its holdings by more than half through a $220.5-million sale of common shares to a syndicate of underwriters.

The company announced that the Ontario Teachers Pension Plan Board is selling about 21 million common shares for $10.50 each -- about 17 per cent below the market price of $12.69 on Tuesday just before trading of the stock was halted.

The sale will reduce OTPP's stake in the Toronto-based company to 9.9 per cent from the current 25.2 per cent. Until August, OTPP had about 37 per cent of the equity in Maple Leaf.

It was no secret that Teachers, one of the country's biggest asset managers, was rethinking its position at Maple Leaf Foods -- a company that OTPP has backed since the mid-1990s, when it was purchased from Hillsdown Holdings by the pension manager and the family of Wallace McCain.

Two representatives of OTPP resigned from the Maple Leaf board of directors last month.

Maple Leaf said the directors from Teacher's wanted amendments to the minutes of a board meeting that would show that their support for a $755-million restructuring plan was subject to certain conditions.

In August, teachers previously sold, at a significant discount, a 10 per cent stake in the food processor to activist hedge fund West Face Capital Inc., known for cracking down on the operating costs of companies.

Teachers' also said previously it would be open to selling its remaining 25 per cent interest at the right price.

The Toronto-based food company has been squeezed by competition, high input costs and a Listeria scare that led to a major recall two years ago.

Maple Leaf said last month it plans to spend $755 million on a major reorganization starting this year and running through 2013. The cost reduction efforts are expected to boost profit margins by 75 per cent over five years.

It will open a new large-scale prepared meats plant at an undisclosed location, with construction expected to start in 2012.

It has previously announced a similar strategy in its bakery business that will consolidate three Toronto-area bakeries into a massive plant in Hamilton.

Maple Leaf, which is also Canada's largest baker through its Canada Bread subsidiary, employs about 23,500 people at operations across Canada, the U.S., the U.K. and Asia.