"The sale of the North American Fresh Bakery business will allow us to aggressively invest in our core protein and coffee businesses. In both categories, we are a leading player, with healthy margins and a strong track record of innovation. We are actively pursuing growth here, organically and through acquisitions," said Marcel Smits, Sara Lee's interim CEO.
Sara Lee, Grupo Bimbo and the bakery industry have lately faced severe competition where cutthroat pricing has led to lower revenue and profits. Sara Lee, which also reported its first-quarter results today, noted that its North American fresh bakery business posted a 4.6% drop in net sales to $516 million in the quarter. The unit reported an operating loss of $1 million in the quarter, compared with income of $14 million last year.
On Tap: A $1 Billion Investment
The deal is expected to expand Grupo's Bimbo Bakeries USA, allowing it to enlarge its footprint in the U.S., particularly in the Midwest and Southeast. Bimbo Bakeries currently has a base in the Northeast and Texas.
"We will build new bakeries where we need them. We will renew existing facilities. And we will improve our technology and infrastructure," BBU President Gary Prince said in a statement.
According to the companies, the merger will bring Sara Lee's Soft and Smooth products under the same roof as Bimbo Bakeries' Thomas', Oroweat, Bimbo and other brands. Sara Lee was up a slight 0.61% to $14.80 a share in premarket trading, over the previous day's close.