Milling & Baking News Corporate Profiles - October 2011 - (Page 72)

Company Overview Grupo Bimbo S.A.B. de C.V. The acquisition of Sara Lee baking business on track though progress is slow s of late September, Mexico Citybased Grupo Bimbo S.A.B. de C.V ., the largest baking company in both the United States and Mexico, was poised to acquire the North American fresh bakery business of Sara Lee Corp. Daniel Servitje, chief executive officer of Grupo Bimbo, announced his company’s plan to acquire Sara Lee’s fresh bakery business in November 2010 in a transaction he said carried a price tag of $959 million. While the deal has taken longer to conclude than expected, it seemed to be on track to be completed before the end of 2011. In his November 2010 announcement, Mr. Servitje noted Sara Lee’s North American fresh bakery business operates 41 plants, manages close to 4,800 distribution routes and employs around 13,000 people. If the Sara Lee operations are fully merged with Bimbo’s existing baking operations in the United States managed by Bimbo Bakeries U.S.A. (B.B.U.), Bimbo’s combined U.S. baking business would employ more than 28,000 people, operate 75 plants and distribute products through more than 13,000 routes. The transaction would create a baking company with a scale never before witnessed in the United States. Specifically, the acquisition includes a royalty-free perpetual license to the Sara Lee brand in fresh bakery products in the A Americas, Asia, Africa and Eastern and Central European countries, as well as a portfolio of regional brands. Mr. Servitje said the acquisition is highly complementary to B.B.U.’s existing operations with regard to product lines, bakeries and geographies. In early September 2011, Moody’s of Mexico confirmed a Baa2 unsecured rating for Grupo Bimbo. The confirmation completed a review that began with Bimbo’s announcement relating to the Sara Lee fresh baking business acquisition. Mr. Servitje said once the acquisition is completed, Bimbo will invest more than $1 billion in its U.S. operations in the next five years “to create a highly efficient manufacturing and service platform, including new bakeries and the modernization and updates of existing facilities.” Meanwhile, Bimbo’s overall existing operations, including its Mexican, U.S. and Latin American baking businesses, struggled with high commodity prices that adversely affected earnings growth during the company’s second quarter ended June 30. Net majority income for the company in the second quarter was NP1,054 million ($90,725,000), down 16% from the same period a year ago. Sales rose 4% to NP29,999 million ($2,582 million). Operating income in the United States Daniel Servitje during the second quarter of fiscal 2011 was NP1,035 ($89,097,000), down 8% from the same quarter in 2010. Sales fell 6%, to NP11,492 ($989,326,000). “Clearly, the raw materials environment is very challenging,” Mr. Servitje said, pointing to commodity prices much higher than a year earlier. While sales in the United States fell 6% in peso terms, sales in dollar terms actually were up 2% because Bimbo raised product prices. Still, Mr. Servitje characterized the U.S. consumption environment as “soft.” Mr. Servitje noted B.B.U.’s new plant in Topeka, Kas., became operational in June and was distributing bread and buns in the central part of the United States. CP F ast acts Bimbo was poised to complete its historic acquisition of Sara Lee’s North American fresh bakery business. High commodity prices adversely affected Bimbo’s bottom line in its second quarter ended June 30. Bimbo Bakeries U.S.A.’s new Topeka, Kas., baking plant was up and running. 72 \ October 2011 Milling & Baking News • Food Business News • Baking & Snack • Meat & Poultry Corporate Proﬁles

Table of Contents for the Digital Edition of Milling & Baking News Corporate Profiles - October 2011

Milling & Baking News Corporate Profiles - October 2011