Bimbo Bakes Jumbo US M&A

Continuing the trend of LatAm corporates expanding beyond region, Mexico’s Grupo Bimbo is close to acquiring US assets belonging to Canada’s Weston Foods for upwards of $2bn, say people away from the transaction. The Mexican bread and confectionary manufacturer – whose Bimbo Bakeries USA subsidiary already distributes Weston Foods brands in the western US – is understood to be seeking to acquire the eastern distribution assets of the same brands. These include Thomas, Entenmann’s and Boboli. Bimbo, which is present in 12 LatAm countries, is heard looking to raise funds in the LatAm loan market for the deal, and has already tapped a group of banks. A size of roughly $2bn in multiple tranches is being talked about for the financing by bankers not on it. Among those rumored to be involved are BBVA, Citi, ING and Santander. Loans experts say it will probably be a club that is syndicated later on, given very tough market conditions. For advice on the acquisition, Bimbo is heard to have hired New York-based Atlas Advisors, an M&A boutique that earlier this year advised Grupo Kuo in its sale of an asset to Mexichem. At the end of September, Grupo Bimbo’s consolidated holdco debt stood at $1bn, according to S&P which rates the company BBB+ with total debt to Ebitda of 1.1x. Bimbo finance officials did not return repeated calls seeking comment and a spokesman declines to comment on specifics of the transaction. Atlas and the banks rumored to be lending to the company also decline to comment. Brazil’s Magnesita recently agreed to acquire Germany’s LWB and M&A specialists say high grade LatAm firms will continue to seek targets ex-region, despite the credit crunch.