Mexico’s Grupo Bimbo SAB, the second largest bakery company in the world by revenue, may issue debt in the U.S. or Mexico to help finance its $959 million acquisition of Sara Lee Corp.’s fresh bakery assets in North America.
According to Armando Giner, director of investor relations at Bimbo, market conditions are favorable at the moment and the company is analyzing the possibility of issuing debt in both countries, as well as using bank financing.
Until now, it had been expected that the company would use cash and its existing credit facilities.
Bimbo agreed to buy the U.S. fresh bakery operations of Sara Lee Corp. in November, and it expects the transaction to close in the first half of this year. The acquisition includes 41 plants and close to 4,800 distribution routes. North American Fresh Bakery had sales of around $2 billion in the 12 months to Oct. 2, Bimbo said.
The optimal financing is likely to consist of 70 percent or 75 percent debt with the balance consisting of cash on hand, he said.
The company is also preparing to raise investments by 38 percent, to $400 million, this year. This includes new investments to be made in the Sara Lee operations once the deal is approved. Over five years, the investment in the U.S. should come to around $1 billion.
In the U.S., Bimbo’s priority will be integrating its bakery operations and the acquired ones. But Bimbo is still open to new international acquisitions. Giner says there are no concrete M&A plans at the moment, but he says Latin America offers good growth opportunities.
Grupo Bimbo has 103 plants and more than 1,000 distribution centers in 17 countries in the Americas and Asia.
