Saturday, November 1, 2014
Inquirer Daily News

Bimbo must sell some PA brands, US says

Buying Holsum and Milano would have given the Mexican breadmaker more than half the sliced-bread market in central and northeast Pennsylvania

Bimbo must sell some PA brands, US says

(Revised and corrected: Bimbo says US deal limits brand, not bakery, ownership) Bimbo Bakeries USA, the Mexican-owned, Horsham-based conglomerate that sells Arnold, Thomas', Entenmann's, Stroehmann's and many other breads, has agreed to divest the Holsum and Milano sliced-bread brands as it acquires Sara Lee's Butter-Krust bakery plants in Northumberland and Sunbury, Pa.,  the US Department of Justice said Friday.

The settlement of a Justice antitrust complaint "does not require divestiture of the bakeries," and "there are no plans to sell the two plants," David Margulies, a spokesman for Bimbo, told me. Bimbo will acquire the Butter-Krust brand, and the company "intends to grow the business in Pennsylvania and around the country."

Mexican-owned Bimbo, whose U.S. arm had nearly $4 billion in annual sales to supermarkets and other store chains, had agreed to buy Sara Lee's U.S. bakeries, with over $2 billion in sales, for $959 million. But the government's antitrust unit said the deal would leave too many bread brands in too few hands, enabling Bimbo to potentially jack up bread prices and collect monopoly profits in some markets.

Justice says Bimbo agreed to divest the upstate Pennsylvania brands, others in California and the central Great Plains states, where Bimbo controlled more than half the local sliced-bread market following the Sara Lee deal. Sara Lee said here that the sales would reduce Bimbo's purchase price for the bakeries it's keeping to $709 million.

Sara Lee bought Butter-Krust in 2006. Butter-Krust president James Apple wasn't available for comment.

In this statement, Bimbo boss Gary Prince said his company "will invest over $1 billion" by 2017 "to promote growth by creating efficient manufacturing and delivery systems in every region to serve its customers," and "will build new bakeries where we need them, renew existing facilities and improve our technology and infrastructure." He added, “Our investments will create manufacturing jobs in the U.S.”

Bimbo employs 225 "associates" at the Horsham corporate office, and plans to add more -- it isn't saying how many -- "as the acquisition and integration is completed," Margulies told me. Bimbo also employs around 230 at its Montgomery County bakery.

Does Bimbo really expect the investment will create factory jobs even though modernized bakeries are typcially automated? "While more modern plants may require fewer associates, new plants and the overall growth of the business will create new manufacturing jobs," Margulies told me.   

Joseph N. DiStefano
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PhillyDeals posts raw drafts and updates of Joseph N. DiStefano's columns and stories about Philly-area finance, investment, commercial real estate, tech, hiring and public spending, which he's been writing since 1989, mostly for the Philadelphia Inquirer.

DiStefano studied economics, history and a little engineering at Penn, taught writing at St. Joe's, and has written the book Comcasted, more than a thousand columns, and thousands of articles, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

Joseph N. DiStefano
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