Fitch: Terms of Bimbo deals neutral to credit quality
Oct. 26, 2011
by Eric Schroeder
MONTERREY, MEXICO — Fitch Ratings said it views the final terms and conditions of Grupo Bimbo S.A.B. de C.V.’s acquisition of Sara Lee’s Fresh Bakery business in North America and Sara Lee’s Fresh Bakery business in Spain and Portugal as neutral to Grupo Bimbo’s credit quality. As a result, Fitch said it does not expect to take any rating action on Grupo Bimbo’s ratings.
The ratings service maintained its prior expectation that the pro forma total debt-to-EBITDA ratio should approximate 2.5 times after concluding the acquisitions. The ratings also take into account that Grupo Bimbo will maintain an important generation of cash flow that will be used to deleverage, strengthening its financial position.
Regarding the acquisition of the fresh bakery business in Spain and Portugal, Fitch said it believes the transaction will give Grupo Bimbo access to the European market, slightly improving its revenue diversification.
“The transaction valued at $161 million will be funded with a combination of available cash and credit facilities,” Fitch said. “This operation is expected to add $24 million of EBITDA and no material synergies are expected.”
Fitch added that Grupo Bimbo’s ratings reflect “its important size and scale within the global bakery industry, its strong brand recognition and positioning in the markets where it operates, and its extensive distribution network that provides a key competitive advantage. The ratings also incorporate the company’s geographic diversification, as well as a broad brand product portfolio that covers a wide consumer base.”
In addition, Fitch said it considers that Grupo Bimbo participates in a relatively stable industry that is less exposed to economic downturns, which has historically led to low volatility in the company’s sales and margins.