Weston Sells to Bimbo
The assets being sold are part of Weston Foods Inc., Dunedin's principal U.S. operating subsidiary, and include the Arnold, Brownberry, Entenmann's, Freihofer, Stroehmann and Thomas' brand names. For the 52 weeks ended October 4, 2008, the business being sold contributed $2.2 billion of sales and $255 million of EBITDA to Weston's consolidated results. Exclusive of restructuring charges, fair value adjustments on commodity derivatives, and adjustments of insurance reserves taken in the fourth quarter of 2007 and the third quarter of 2008 as a result of favorable workers compensation experience, EBITDA for the 52 weeks ended October 4, 2008, was approximately $275 million. The company will report a significant gain on disposal reflecting the value creation since the Best Foods Baking acquisition in 2001.
Dunedin will retain its other U.S. baking interests -- Interbake Foods, which produces biscuits, cookies, cones and wafers, and Maplehurst Bakeries, which produces and distributes frozen bakery products.
The transaction is subject to customary closing conditions, including U.S. antitrust legislation, and is expected to close in the first quarter of 2009. The transaction is also subject to approval by a majority of Grupo Bimbo's shareholders. As part of the transaction, shareholders controlling a majority of the outstanding shares of Grupo Bimbo have agreed to vote their shares in favour of the transaction. Grupo Bimbo has received financing commitments which, together with funds on hand, are sufficient to fully fund the full amount of the purchase price. If Grupo Bimbo fails to complete the transaction in certain circumstances, including if the financing syndicate fails to advance the necessary funds, Dunedin shall be entitled to payment of $100 million. The outside date for completion of the transaction is June 30, 2009.
The sale marks the second such transaction for GWL this year. The company closed the sale of Neilson Dairy to Saputo Inc. on December 1, 2008.
In announcing the transaction, Mr. Weston said, "Having sold both the dairy business and the U.S. fresh baking business at good multiples, we will sit at George Weston Limited with strategically well positioned companies with leading market positions in food retail and baking in Canada and a significant sum of cash. We intend to use that cash wisely and at the appropriate time."
From the December 22, 2008, Prepared Foods e-Flash