Anglo-Dutch giant Unilever announced Monday that it intends selling the Bestfoods Baking Co. to Canadian baker and food retailer George Weston Ltd. for US$1.77bn.
George Weston, best known for making Girl Scout cookies, is a surprise winner of the business as analysts expected Sara Lee to emerge the victor of an auction for the bakery firm. The acquisition is a significant shift in strategy for Weston, as the company was not considered a serious contender due to business interests that primarily focus on supermarkets.
The Canadian firm will add to its portfolio brands like Entenmann’s sweet baked goods, Thomas’ English muffins, bagels and waffles and Oroweat, Brownberry and Arnold breads.
Weston operates 23 fresh bakery plants in the U.S. and Canada but this deal would herald a major move into the U.S. market. The company controls Canada’s largest line of supermarket chains through its controlling interest in Loblaw Cos., which operates supermarket chains Loblaws and Provigo. Weston also has business interests in frozen food, biscuits and dairy, and some fish-processing plants and salmon farms.
Richard J. Currie, President of Weston said: “Bestfoods Baking is an outstanding company. Its brands, earnings performance, management and prospects make it one of the most desirable acquisition candidates in the North American baking industry. The opportunity to add such a unique business to our portfolio does not come along every day. We are delighted to have that opportunity and we are confident of the future success of this combination.”
Sources close to the sale said Sara Lee had initially bid US$1.4bn while Mexican firm Grupo Bimbo had offered US$1.5 billion for the business. Analysts had expected the business to fetch no more than US$1.6bn. George Weston was believed to be only interested in buying the Bestfoods bread division but it appears that Unilever wasn’t interested in selling the bakery business in parts. Earthgrains, and U.S. buyout firm Hicks, Muse, Tate & Furst were among the other parties interested in buying the baking business.
The deal requires approval by regulatory authorities but Unilever said it expects the transaction will be completed in the second quarter of 2001.