George Weston: sells U.S. fresh baking assets to Grupo Bimbo

Toronto / CA. (gwf) George Weston Limited announced that its subsidiary, Dunedin Holdings S.a.r.l., has agreed to sell its fresh bread and baked goods business in the United States to Grupo Bimbo S.A.B. de C.V., one of the world´s leading and largest baking companies, for gross and net cash proceeds of approximately 2,5 billion USD including approximately 125 million USD of interest bearing assets.

The assets being sold are part of Weston Foods Inc., Dunedin´s principal U.S. operating subsidiary, and include the Arnold, Brownberry, Entenmann´s, Freihofer, Stroehmann and Thomas´ brand names. The Weston Foods Inc. unit has more than 8’000 employees, 22 plants and 4’000 distribution routes.

For the 52 weeks ended October 04, 2008 the business being sold contributed 2,2 billion USD of sales and 255 million USD of EBITDA to Weston´s consolidated results. Exclusive of restructuring charges, fair value adjustments on commodity derivatives, and adjustments of insurance reserves taken in the fourth quarter of 2007 and the third quarter of 2008 as a result of favourable workers compensation experience, EBITDA for the 52 weeks ended October 04, 2008 was approximately 275 million USD. The company will report a significant gain on disposal reflecting the value creation since the Best Foods Baking acquisition in 2001. Dunedin will retain its other U.S. baking interests – Interbake Foods, which produces biscuits, cookies, cones and wafers, and Maplehurst Bakeries, which produces and distributes frozen bakery products.

The transaction is subject to customary closing conditions, including U.S. antitrust legislation, and is expected to close in the first quarter of 2009. The transaction is also subject to approval by a majority of Grupo Bimbo´s shareholders. As part of the transaction, shareholders controlling a majority of the outstanding shares of Grupo Bimbo have agreed to vote their shares in favour of the transaction. Grupo Bimbo has received financing commitments which, together with funds on hand, are sufficient to fully fund the full amount of the purchase price. If Grupo Bimbo fails to complete the transaction in certain circumstances, including if the financing syndicate fails to advance the necessary funds, Dunedin shall be entitled to payment of 100 million USD. The outside date for completion of the transaction is June 30, 2009. The sale marks the second such transaction for George Weston Limited this year. The company closed the sale of Neilson Dairy to Saputo Inc. on December 01, 2008. (complete press release).

Addition: Grupo Bimbo S.A.B. de C.V., producer of Entenmann´s cakes and Oroweat loaves, expects to see 7,5 billion USD in sales during 2008 and ten billion USD during 2009, Guillermo Quiroz, the company´s chief financial officer, said in Mexico City. «2009 sales should be around ten billion USD». Bimbo has spent more than 200 million USD this year buying companies in Latin America and China to cut its dependence on Mexico. The company became the largest bread maker in Brazil earlier this year after buying 75 percent of Nutrella Alimentos SA, and Chief Executive Officer Daniel Servitje has said he aims to create the world´s largest breadmaker within two years. «This is the most important transaction in the history of Grupo Bimbo, and one of the largest in the history of baking», Servitje said in the statement.