Grupo Bimbo: To Acquire Sara Lee NAFB

Mexico City / MX. (gb) Grupo Bimbo S.A.B. de C.V. announced an agreement to purchase Sara Lee Corporation´s North American Fresh Bakery (Sara Lee NAFB) business for an enterprise value of 959 million USD.

The acquisition includes a royalty-free perpetual license to the iconic Sara Lee® brand in fresh bakery products in the Americas, Asia, Africa and Eastern and Central European countries, as well as a portfolio of regional brands that are well-regarded in their local markets. Sara Lee NAFB operates 41 plants and close to 4’800 distribution routes, and employs approximately 13’000 associates. For the twelve month period ended October 02, 2010, Sara Lee NAFB generated sales of two billion USD and adjusted Ebitda of 108 million USD.

The transaction provides Grupo Bimbo´s U.S. subsidiary, Bimbo Bakeries USA (BBU), with the opportunity to build a more efficient, low-cost platform to serve customers across the U.S. The acquisition is highly complementary across product lines, bakeries and geographies. Sara Lee NAFB´s brand and product portfolio brings a developed business in key geographic areas and categories in which BBU was underrepresented.

The combined businesses will employ more than 28’000 associates, operate 75 plants and distribute its products through more than 13’000 routes, with estimated pro forma sales of 5,8 billion USD in 2010. The integration of Sara Lee NAFB with BBU´s current operations is expected to generate annual synergies of approximately 150 to 200 million USD by 2013.

Daniel Servitje, Chief Executive Officer of Grupo Bimbo: «This acquisition demonstrates our commitment and singular focus on building a U.S. bakery business that provides the highest quality products at the best value to consumers, and marks a significant milestone in the growth of our company. It is a privilege to take on stewardship of the Sara Lee brand in the fresh bakery category, and we honor the people and products behind the business. Together, we form a remarkable baking company with the capacity to nourish, delight and serve the next generation of consumers».

Gary Prince, President of BBU: «The addition of Sara Lee NAFB to BBU enhances our portfolio with complementary and well-recognized brands and products, expands our geographic footprint and provides us with a manufacturing and distribution platform to better serve customers across the U.S. We will immediately, upon closing, begin to improve the efficiency of this platform by investing in excess of one billion USD in bakeries, technology and infrastructure over the next five years. With our strategic focus on baked goods, we look forward to delivering the kind of value to our customers and consumers that they have come to expect from us. I am most excited that the opportunity this presents for associates of both companies to grow personally and professionally is unparalled in the recent history of the industry».

To fund the transaction, Grupo Bimbo will have access to cash holdings and financing available under existing long-term committed credit facilities. Post-acquisition, the company will generate a pro forma total debt-to- Ebitda ratio of approximately 2,6 times. Commenting on its capital position, Grupo Bimbo´s Chief Financial Officer Guillermo Quiroz noted: «This transaction strategically strengthens our business and maintains Grupo Bimbo´s financial flexibility and strong credit profile».

The transaction has been approved by the Board of Directors of both companies and is expected to close during the first half of 2011, subject to regulatory approval. Grupo Bimbo retained Atlas Strategic Advisors LLC as financial advisor to the transaction; Cleary Gottlieb Steen + Hamilton LLP as legal and antitrust advisor; White + Case LLP as antitrust advisor; Morgan, Lewis + Bockius LLP as labor advisor; and McKinsey + Company as management consultant.

About Grupo Bimbo: Grupo Bimbo S.A.B. de C.V. is one of the largest baking companies in the world in terms of production and sales volume. As the market leader in the Americas, Grupo Bimbo has 99 plants and 1’000 distribution centers strategically located in 17 countries throughout the Americas and Asia. Its main product lines include sliced bread, buns, cookies, snack cakes, English muffins, bagels, pre-packaged foods, tortillas, salted snacks and confectionery products, among others. Grupo Bimbo produces over 7’000 products and has one of the most extensive direct distribution networks in the world, with more than 40’000 routes and more than 105’000 employees.

About Sara Lee: Each and every day, Sara Lee Corporation delights millions of consumers and customers around the world. The company has one of the world´s best-loved and leading portfolios with its innovative and trusted food and beverage brands, including Ball Park, Douwe Egberts, Hillshire Farm, Jimmy Dean, Sara Lee and Senseo. Collectively, the brands generate nearly eleven billion USD in annual net sales. Sara Lee has approximately 33’000 employees in its continuing operations worldwide.