Bimbo bakeries acquires Sara Lee US bakery division

By Helen Glaberson

- Last updated on GMT

Related tags Sara lee Bakeries

Bread giant Grupo Bimbo has acquired the North American bakery business of Sara Lee for $959m.

Grupo Bimbo will gain the rights to the Sara Lee​brand in the fresh baked goods category globally, with the exception of Western Europe, Australia and New Zealand, in a deal that is expected to close during the first half of 2011.

“This transaction will allow the combined Grupo Bimbo and Sara Lee Bakery business to focus on the fresh bakery category and winning in the marketplace,”​ said CJ Fraleigh, chief executive officer of Sara Lee North America.

In addition to the national fresh bakery brand Sara Lee, the acquisition provides Grupo Bimbo with a collection of regional bakery brands, such as Grandma Sycamore’s, Heiner’s and Rainbo.

As part of the transaction, all of Sara Lee’s about 13,000 North American fresh bakery employees will transfer to Grupo Bimbo. The sale also includes 41 plants in the US.

Sara Lee said it would retain ownership of its branded frozen desserts and deli meats.

$1bn investment

According to Bimbo Bakeries USA (BBU), which one of the world’s largest bread companies, the business will invest in excess of $1bn in​manufacturing facilities and manufacturing jobs across the US over the next five years.

"We will build new bakeries where we need them. We will renew existing facilities. And, we will improve our technology and infrastructure,"​ said Gary Prince, BBU President.

"We expect to grow the Sara Lee route system by expanding Soft & Smooth's geographic reach. At the same time, we expect to grow the BBU route system with a renewed focus on variety and innovation,"​ he said.

BBU will also invest in and renew its regional brands and supply systems: "Our investments in the supply chain will position these regional brands to grow and flourish,"​ said Prince.

When completed, BBU said the combined company will operate 75 bakeries in 31 states and will serve the entire US market.

The move follows Sara Lee’s strategy of selling off its non-food lines, for example, in July this year announced the sale of its air care business Ambi Pur to Procter & Gamble.

The company said it plans to use some of the $959m sale proceeds to accelerate its repurchase of $2.5bn to $3bn in Sara Lee shares by the end of its fiscal 2012 ahead of its 2013 target.

The news was posted at the same time as the company announced a 32 per cent drop in first -quarter profit. Net income fell to $192m.

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