Bimbo to acquire Weston's western U.S. baking business. (News Wire).

Grupo Bimbo, Mexico's largest wholesale baking company, took a major step in its long-term strategic goal to be one of the largest baking companies in the United States after it announced late this month that it had reached an agreement to acquire the western

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When the deal, which is subject to regulatory approval, is completed, Bimbo will become one of the nation's largest wholesale baking companies with an estimated $1.2 billion in annual sales. Bimbo operates its U.S. businesses under its Fort Worth, Texas-based Bimbo Bakeries U.S.A. division. The company expects the transaction to close during the first half of 2002.

"It has been deeply satisfying to achieve this acquisition as it will allow us to reach a goal we sought for many years: to have an important presence in the U.S. market," said Roberto Servitje, Grupo Bimbo's chairman, who began spearheading a presence in the United States about a decade ago.

"With 30% of our sales coming from the U.S., and the ability to serve more than half of its population, we are confident that this represents a strong consolidation of our operations in the international markets," he added.

In many ways, the acquisition will be a logical fit for Bimbo, which currently produces a variety of popular and premium products throughout the Southwest and West Coast under such brand names as Mrs Baird's, Bimbo, Marinela and Tia Rosa.

Under the terms of the agreement, Bimbo gains access to such super-premium brands and products as Oroweat bread and buns, Entenmann's sweet baked goods, Thomas' English muffins and bagels, and Boboli pizza breads.

Specifically, Grupo Bimbo will acquire, among other assets, the Oroweat brand, a direct-store distribution system with some 1,300 routes and five bakeries in California, Colorado, Oregon and Texas. Under a previous agreement, Bimbo Bakeries U.S.A. already distributes Oroweat products for the Texas market.

Moreover, Grupo Bimbo acquires full rights relating to products under the Entenmann's brand in those markets west of the Mississippi River as well as the distribution rights for the Thomas' and Boboli brands in the same region. Total sales for these products were $620 million in fiscal 2001.

"This acquisition fits perfectly with our vision of creating a preeminent baking business in the United States," said Daniel Servitje, Grupo Bimbo's CEO. "We are acquiring a unique franchise in the baking industry, very complementary with our existing operations from a brand, product, channel and geographic perspective. In addition to adding such a strong portfolio of brands, we are also very excited with the excellent team that comes with the business and are very confident that the combined management skills and assets represent a formidable platform for sustained growth and profitability as well as consolidate our position as one of the leading players in the baking industry worldwide."

Toronto-based Weston acquired Oroweat, Entenmann's Thomas' and other powerhouse brands when it purchased Bestfoods Baking from Anglo-Dutch giant Unliever NV last year. Weston later announced that it was swlling some of the assets of Bestfood Baking-namely its operations west of the Mississippi River-to focus on its operations in the eastern half of the United States. There, in addition to its Bestfoods Baking business units, Weston Bakeries Ltd. Has had a strong presence in the Northeast for years and operates such businesses as Stroehmann Bakeries and Maier's Bakery in addition to its Canadian operations. Weston has said it's unloading the Bestfoods Baking business units in the western half of the United States because it had to no previous operation there. The proceeds of the sale are earmarked to be used to help reduce Weston's debt that it built up as a result of the $1.76 billion acquisition of Bestfoods Banking.

Currently, Bimbo Bankeries USA operates 11 plants and has about $590 million in annual sales. The company estimates that in will achieve about $20 million in annual synergies for the next two years. Furthermore, the $610 million purchase price includes about $90 million of present value of the tax benefits to be derived from amortization of goodwill resulting from the acquistion.

Internationally, Grupo Bimbo has more than 70 plants and distributors in 16 nations throughout the Americas and Europe, with more than 62,000 employees and more than 750 products. Global sales for the company totaled $3.3 billion in 2000.