Grupo Bimbo: Receives Clearance for US Acquisition

Mexico City / MX. (gb) Grupo Bimbo S.A.B. de C.V. announced the U.S. Department of Justice (DOJ) has concluded its review of Grupo Bimbo´s proposed acquisition of Sara Lee Corporation´s North American Fresh Bakery (NAFB) business. The acquisition includes a royalty-free perpetual license to the iconic Sara Lee brand in fresh bakery products and a portfolio of regional brands that are well-regarded in their markets. The business , prior to any DOJ-required divestment, operates 41 plants and more than 4’700 distribution routes and employs approximately 13’200 associates.

As a condition to regulatory clearance, the Company has agreed to a divestiture of certain brands and accompanying assets and routes, including the Sara Lee and EarthGrains brands in California, and certain smaller brands in the Harrisburg/Scranton region of Pennsylvania and the Kansas City, Oklahoma City and Omaha metropolitan areas. The brands to be divested generated approximately 155 million USD of the total two billion USD in sales cited in November 2010, when the Grupo Bimbo-NAFB transaction was announced.

To reflect the revised scope of the NAFB assets being acquired and the divestitures to be undertaken, the final enterprise value has been revised to 709 million USD.

Daniel Servitje, Chief Executive Officer of Grupo Bimbo, said, «We are pleased to move forward with our planned acquisition of Sara Lee´s North American Fresh Bakery business. It is a significant milestone in the growth of our company, and one that will create significant value for customers, consumers, associates and shareholders. The integration process will begin immediately after closing and we expect to gradually reach 150 million USD in annual synergies by year three».

Gary Prince, President of Bimbo Bakeries USA, added, «This acquisition represents an ideal fit in terms of filling in our geographic footprint and adding highly complementary brands and the overall product portfolio. At the same time, we will invest in bakeries, technology and infrastructure to improve the efficiency of our combined businesses. We welcome our new associates in creating the leading North American bakery company».

To pay for this transaction, Grupo Bimbo will utilize cash on hand and financing available under existing long-term credit facilities. Guillermo Quiroz, Grupo Bimbo´s Chief Financial Officer, noted, «Our financial flexibility and credit profile remain strong, with a pro forma total debt-to-Ebitda ratio of 2,5 times. It should also be noted that we are strengthening and diversifying both our revenue and cash flow». The divestiture is still subject to final approval by the U.S. District Court and customary documentation. This transaction is expected to close in the coming weeks.