Flowers completes acquisition of Sara Lee licenses in California
THOMASVILLE, GA. — Ending what turned into a contentious transaction, Flowers Foods, Inc. has completed its acquisition of licenses to the Sara Lee and Earthgrains brands in California from Bimbo Bakeries USA, a subsidiary of Grupo Bimbo S.A.B. de C.V.
The sliced breads, buns and rolls businesses to be acquired have annual sales of about $134 million. Financial terms of the transaction were not disclosed.
“Our team has been working to ensure a smooth transition of these brands in California,” said George E. Deese, chairman of the board and chief executive officer for Flowers. “Now that the transaction has closed, the roll-out of Sara Lee and Earthgrains products on our distribution routes will begin immediately in Southern California and continue northward in phases over the coming months.”
The transaction is part of an October 2011 agreement between Bimbo and the Department of Justice in connection with Bimbo’s acquisition of the North American fresh bakery business of Sara Lee Corp., first announced in October 2010. Under the agreement, Bimbo was required to divest assets from eight markets because of anti-competitive concerns by the federal government. Four of the eight markets involved are in California, including Los Angeles, where the D.O.J. had estimated the Sara Lee acquisition would give B.B.U. a 59% market share; San Diego, 63%; San Francisco, 56%; and Sacramento, 59%. In October 2012, Flowers announced the United States Department of Justice had approved an agreement for Flowers to acquire the Sara Lee and Earthgrains business in California, along with another agreement for the acquisition of the license to the Earthgrains brands for fresh bakery products in the Oklahoma City, Okla., market. The Oklahoma transaction was completed in 2012.
Three months later Bimbo sought a temporary injunction to delay the completion of its sale to Flowers of the California business. The motion was filed after the January announcement that Flowers was the stalking horse bidder for the bread business of Hostess Brands, Inc. across most of the United States.
“Flowers’ acquisition of both the Hostess and Sara Lee (California) assets would give Flowers sole control over the three most significant brands in California for ‘traditional’ breads — the sliced bread used for sandwiches and often preferred by families with young children,” Grupo Bimbo noted in the filing.
The motion put the Flowers acquisition of the Sara Lee and Earthgrains California business temporarily in limbo, but on Feb. 13 U.S. District Judge Emmet G. Sullivan denied the Bimbo motion for a delay.