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Grupo Bimbo has entered into an agreement to acquire US-based foodservice supplier East Balt Bakeries for a US$650m.

East Balt is a foodservice-focused company producing buns, English muffins, rolls, tortillas, bagels, artisanal breads and other baked goods predominantly to quick service restaurants internationally. According to Bimbo, East Balt supplies nearly 13m baked goods daily to more than 10,000 locations in the US, Europe, Asia, the Middle East and Africa.

Founded in 1955 and headquartered in Chicago, East Balt employs approximately 2,200 people across 21 bakeries located in 11 countries. 

Daniel Servitje, chairman and CEO of Grupo Bimbo, said the acquisition advances the Mexico-based bakery giant’s global growth strategy in “high-growth” segments and markets.

Servitje added: “East Balt brings significant expertise, a remarkable track record of profitable growth, and a geographically diverse and highly scalable platform in the foodservice segment, complementing our current business within this channel. This acquisition continues to fulfill our vision of expanding our global reach to better serve more consumers, with entry to eight new countries.

Notably, East Balt enjoys long-standing strategic relationships, with the largest and most established QSR brands in the world.”

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In the 12 months to the end of June, East Balt generated annual sales of approximately $420m and an EBITDA of $70m, Bimbo revealed. Bimbo CFO Guillermo Quiroz said the deal would be accretive to the company’s margins and earnings. “With an efficient and low-cost service model, a profitable capital deployment strategy, and sustained margins, this accretive acquisition in terms of margins, earnings per share and profitability, supports our value creation objectives.”

The transaction is expected to close during the second half of the year, subject to customary closing conditions, including regulatory approvals. It will be funded using an existing committed long-term revolving credit facility. Following completion, Bimbo anticipates a pro-forma total debt to adjusted EBITDA ratio of 2.8 times, Quiroz said.