Flowers buying Bimbo assets in California, Oklahoma
Oct. 26, 2012
by Josh Sosland
THOMASVILLE, GA. — Flowers Foods Inc. has announced an agreement under which the company will acquire baking assets in California and Oklahoma from Grupo Bimbo S.A.B. de C.V. Financial terms of the transactions, which have been approved by the U.S. Department of Justice, were not disclosed.
Under terms of the transaction, Thomasville-based Flowers will gain perpetual, exclusive and royalty-free licenses to the Sara Lee and Earthgrains brands for sliced bread, buns and rolls in California, a business with annual sales of about $134 million.
In Oklahoma, Flowers will gain perpetual, exclusive and royalty-free license to market the Earthgrains brand for a wide range of fresh baked foods in the Oklahoma City market area.
Flowers said the transactions will be completed in phases, with the Oklahoma deal to be completed shortly and the California transaction to close by the end of March 2013.
“The acquisition strengthens our market presence in California, adding about 14.5 million people to the 70% of the U.S. population that currently has access to our fresh breads and rolls,” said George E. Deese, chairman and chief executive officer. “This moves us closer to our goal of reaching 75% of the U.S. population through our direct-store-delivery system by 2016.”
Flowers first entered into the Southern California market with the 2008 acquisition of Holsum Bakery, Inc., based in Phoenix.
In late October 2011, Mexico City-based Bimbo and the D.O.J. reached an agreement under which Bimbo was allowed to acquire the North American fresh baking business of Sara Lee Corp. Under the agreement, Bimbo was required to divest the brands in the markets named in the Flowers transactions as well as smaller brands in the Harrisburg/Scranton region of Pennsylvania and the Kansas City and Omaha metropolitan areas. The smaller brands include Sara Lee’s EarthGrains brand and B.B.U.’s Mrs Baird’s brand in the Kansas City area; Sara Lee’s EarthGrains and Healthy Choice brands in the Omaha area; and Sara Lee’s Holsum and Milano brands in the Harrisburg/Scranton area. The divestitures also will include associated manufacturing, distribution and marketing assets needed “to compete effectively in the sale of those brands in those areas,” the D.O.J. said. Details of those assets were not offered by Flowers in its announcement.
Earlier this year, Pan-O-Gold Baking Co., St. Cloud, Minn., and Schmidt Baking Co., Baltimore, were approved as buyers of brands Bimbo was required to divest in Omaha (Pan-O-Gold) and Harrisburg and Scranton (Schmidt). As a result, only Kansas City remains among Bimbo’s required divestiture markets.