The Sara Lee Corporation has signed an agreement to acquire the Pennsylvania bakery group Butter-Krust Baking for around US$72m. The deal remains subject to regulatory approvals and other customary conditions.

A privately-owned company founded in 1920, Butter-Krust Baking produces white bread, buns and Italian bread at its two plants in Sunbury and Northumberland, Pa. The company’s main brands, Holsum, Butter-Krust Country, Roman Meal and Milano, are marketed in Pennsylvania, Maryland, Virginia, West Virginia, New York, New Jersey and Delaware. Butter-Krust’s sales for 2005 are anticipated to be in excess of US$80m.

“With the acquisition of Butter-Krust Baking, Sara Lee will expand its mid-Atlantic distribution coverage, complementing our recent entry into the Ohio Valley, to better serve our customers and to reach more than 20m additional consumers,” said Sara Lee’s chairman and CEO, Brenda C. Barnes. “Butter-Krust has a terrific reputation with its employees, customers and consumers, and we look forward to bringing this fourth-generation family company into the Sara Lee family. We will leverage the strong relationships that Butter-Krust has developed throughout the region to further expand the Sara Lee fresh bakery brand.”

Prior to this acquisition, Sara Lee estimated that its bakery brands reached more than 70% of consumers in the relatively fragmented US bakery sector. The addition of Butter-Krust should increase this coverage to around 80%, the company said, with the potential to expand further into the mid-Atlantic and Northeast.