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Grupo Bimbo: to acquire East Balt Bakeries

Mexico City / MX. (gb) Grupo Bimbo S.A.B. de C.V. announced an agreement to acquire East Balt Bakeries, a global leader within the foodservice industry, for a price of 650 million USD, cash and debt free.

East Balt is a leading foodservice-focused company that produces and supplies buns, English muffins, rolls, tortillas, bagels, artisanal breads and other baked goods predominantly to Quick Service Restaurants (QSR) around the world. Founded in 1955 and headquartered in Chicago, IL, East Balt employs approximately 2’200 associates globally and operates 21 bakeries in 11 countries across the United States, Europe, Asia, the Middle East and Africa, including two joint ventures. The company produces nearly 13 million baked goods each day to service more than 10’000 locations. This acquisition advances Grupo Bimbo’s global growth strategy in high-growth segments and markets.

«East Balt brings significant expertise, a remarkable track record of profitable growth, and a geographically diverse and highly scalable platform in the foodservice segment, complementing our current business within this channel. This acquisition continues to fulfill our vision of expanding our global reach to better serve more consumers, with entry to eight new countries. Notably, East Balt enjoys long-standing strategic relationships, with the largest and most established QSR brands in the world. We look forward to welcoming all of East Balt’s associates to the Grupo Bimbo family and to our continued growth together», said Daniel Servitje, Chairman of the Board and Chief Executive Officer of Grupo Bimbo.

East Balt generated annual sales of approximately 420 million USD and an Ebitda of 70 million USD (in the last 12 months as of June, 2017). The transaction has been approved by the Board of Directors of Grupo Bimbo and by East Balt and is expected to close during the second half of the year, subject to the satisfaction of customary closing conditions, including regulatory approvals.

Guillermo Quiroz, Chief Financial Officer of Grupo Bimbo, added, «With an efficient and low-cost service model, a profitable capital deployment strategy, and sustained margins, this accretive acquisition in terms of margins, earnings per share and profitability, supports our value creation objectives. To fund the transaction, Grupo Bimbo will utilize an existing committed long-term revolving credit facility, which preserves the Company’s financial flexibility and healthy credit profile. After giving effect to the transaction, we expect a pro-forma total debt to adjusted Ebitda ratio of 2.8 times».

Atlas Advisors is acting as financial advisor to Grupo Bimbo in connection with this transaction. Cleary Gottlieb Steen + Hamilton and White + Case are serving as legal counsels and Deloitte is acting as diligence advisor.