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Maybe the baking industry didn’t get the memo that the global economy has been in a recession.
How else can you explain the flurry of activity in early December concerning Lance, Kellogg’s, Archway, Mother’s and Interstate Bakeries Corp.? And now, Grupo Bimbo, one of the world’s largest baking companies based in Mexico City, announced that it signed an agreement to purchase the U.S. fresh-baked goods business from Toronto-based George Weston Ltd.
With this pending acquisition, Bimbo will have national reach, or something very close to it. When completed, the purchase will provide coast-to-coast access for some of its powerhouse brands such as Bimbo, Marinela and Tia Rosa.
The acquisition also will reunite Bimbo’s Oroweat brand with the Arnold and Brownberry names in the bread aisle. After Weston bought those brands as a part of its purchase of Bestfoods Baking in 2001, it sold off its western bakery operations to Bimbo in 2002. Those three brands were highly successful together when Bestfoods owned them. The Stroehmann, Freihofer’s and Entenmann’s businesses also are included in the $2.38 billion deal.
Certainly, it’s no secret that Bimbo has wanted to be a national player in the United States. Over the years, it has been part of groups to try to acquire Interstate Bakeries Corp., the Kansas City, Mo.-based producer of Wonder bread, Twinkies and other baked goods. Last year, the company made its latest move to team up with the Teamsters and Yucaipa Cos. to explore a possible bid for IBC, but thought better of it. On the face of it, acquiring Weston’s fresh-baked goods business is a much better fit.
Daniel Servitje, Bimbo’s chief executive, called the acquisition “the most important one in Grupo Bimbo’s history,” and he’s not exaggerating.
Weston’s bakery unit has more than 8,000 employees, 22 bakeries and 4,000 routes and had $2.197 billion in sales for the 12 months ended Oct. 4, 2008. The newly integrated operation, which includes Bimbo Bakeries USA’s operations out of Fort Worth, Texas, will employ more than 15,000 people, operate 35 plants and distribute its products on more than 7,000 routes. My estimate is that the combined companies will have roughly $3.5 to $3.8 billion in annual sales.
Lost in the hoopla has been Interstate Bakeries Corp. A judge recently cleared the company to exit from Chapter 11 after years of haggling with unions and endless court battles, plant closings and layoffs. That would have been the lead story if the saga hadn’t been dragging longer than the current presidential campaign that just ended.
In other news, Charlotte, N.C.-based Lance Inc. successfully acquired the Archway brand, and let’s hope that’s good news for the bakers at Ashland, Ohio, bakery, which was suddenly closed in October when that company filed for bankruptcy. Eventually, Archway proved to be another smart pickup by Lance, which has expanded its snack empire over the years with such companies as Cape Cod, Tom’s and Brent & Sam’s.
Finally, Kellogg Co. of Battle Creek, Mich., picked up the Mother’s Cake & Cookie Co., a regional brand out West.
So, who cares about the recession, credit crunch, real estate market crash and layoffs by the millions? In the baking industry, it’s business as unusual, but in a good way.
For more information on these companies, check out our magazine’s archives at www.snackandbakery.com. For more on Bimbo, visit www.bimbobakeriesusa.com.