| | |  Business News 
Bimbo: From Corner Bread Maker to Bakery Giant
 Cyntia Barrera Diaz & Michael O'Boyle - Reuters
go to original
November 10, 2010
Mexico City - Grupo Bimbo, which is buying Sara Lee's North American bakery business, sold its handmade bread loaves for the first time in 1945, from a small shop in the Mexican capital.
Six decades later, the company will become the world's leading bread maker when it closes on the acquisition of the Sara Lee Corp (SLE.N) business for $925 million next year.
Its name, created by combining the words Bambi and bingo, has entered the Mexican culture and language but still raises eyebrows north of the border - where the company will now be the No. 1 player in the fresh bread market.
The deal, which caps a long list of acquisitions around the world over the past 20 years, is Bimbo's second major U.S. purchase in just two years.
"One out of every three sandwiches that are consumed in the United States are going to be made with their bread," said Alan Alanis, an analyst at J.P. Morgan.
The Sara Lee deal will also propel the Mexican company to the world's No. 2 position in bakery goods, which include cakes, cookies and crackers, just behind Kraft Foods Inc (KFT.N), IBISWorld research firm said in a report.
"With a single transaction, Grupo Bimbo further elevates their global baking business and increases both global and U.S. market share," IBISWorld said.
Even before the Sara Lee announcement, Bimbo had 100 plants across the world and sold its products in 17 countries, including hard-to-crack China.
Bimbo, whose logo is a white, apron-wearing teddy bear that appeals to children, was for decades led by now-reclusive co-founder Lorenzo Servitje, formerly one of Mexico's most prominent businessmen, known for his devout Catholicism.
One of Bimbo's most popular brands in Mexico is Marinela cakes and cookies, which took its name from his daughter.
The company Servitje launched together with four others is now led by his son Daniel.
Servitje senior - born in 1918 to a family of immigrants from Spain - is a former member of the Forbes billionaires' list although the family has since been eclipsed by bigger fortunes like that of retail and telecommunications tycoon Carlos Slim.
Bimbo, which used the wholesale newspaper distribution system to transport its own bread products as it first experimented with ways to sell broadly in Mexico in the 1940s, produces everything from Twinkie-like cream-filed sponge cakes to salty snacks and tortillas.
Bimbo first sold its products in the U.S. market in the early 1980s. Its first acquisition outside Mexico was in neighboring Guatemala.
Over the years, plant purchases followed in Costa Rica, Argentina, Peru, Brazil, China, Uruguay, Colombia and Paraguay.
A key step in the rise of the company was the 2008 purchase of the U.S. breadmaking unit of Canada's George Weston Ltd (WN.TO) for $2.38 billion, strengthening its presence in the coveted U.S. market.
"That was the breakthrough ... that took them to a never-seen-before efficiency level in the United States and I think it has completely changed their operation profile up there," Santander analyst Joaquin Ley said.
Every U.S, consumer who eats an Entenmann's pastry or a Thomas' English muffin is helping boost Bimbo's fortunes.
A fast-growing Hispanic community is no stranger to Bimbo's products in key U.S. cities like Los Angeles, New York and Chicago. The Mexican company plans to invest $1 billion over the next five years in its U.S. operation alone.
After the Sara Lee transaction closes in 2011, the United States will become Bimbo's main sales contributor, followed by Mexico and the rest of Latin America.
Could there be a backlash over a Mexican business expansion into a United States already divided over Mexican immigrants?
"I think it is really interesting. (For many Americans) this purchase is going to signal another way they are losing America," said Nicole Guidotti-Hernandez, a Texas-based scholar who works on U.S.-Mexico relations. "Now it is not the immigrants stealing the job but those people buying the corporations."
Bimbo shares jumped 4.56 percent on Tuesday to close at 101.90 pesos while Sara Lee added 2.77 percent to $15.21.
Still, ratings agency Standard & Poor's put the company on negative credit watch, saying debt would likely increase as a result of the acquisition.
(Editing by Steve Orlofsky, Gary Hill)
|
|
| |
Vallarta Weddings
Tell a Friend
Site Map
Print this Page
Email Us