July 24, 2017

Middle market private equity firm One Equity Partners announced its exit from East Balt Bakeries through a sale to Grupo Bimbo for $650 million.

Headquartered in Chicago, Illinois, East Balt is a global producer of specialty bread products, producing 13 million bagels, biscuits, buns, English muffins, tortillas and breads per day. Founded in 1955 with one bakery and one delivery truck, the company has grown to operate 21 bakeries across 11 countries that supply the world’s quick serve restaurants.

Since acquiring East Balt in December 2012, One Equity Partners has implemented a strategic growth plan for the company, overseeing three acquisitions by the company, the construction of two bakeries in Rome and Tianjin, China, and the commencement of the construction of another bakery in Paris, resulting in a near doubling of East Balt’s EBITDA to $70 million.

“One Equity Partners enabled us to execute upon our growth strategy to create a stronger, more diversified company with significant operating efficiencies and an expanded global footprint to serve our loyal customers around the world,” said Mark Bendix, CEO of East Balt Bakeries. “With the resources of our new owner, we expect that our ability to make and supply best-in-class bakery products will only be enhanced.”

For Grupo Bimbo, the deal will align with the group’s focus of targeting high-growth markets.

“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,” said Daniel Servitje, Chairman of the Board and Chief Executive of Grupo Bimbo.

Demand Dynamic

Driven by changing lifestyles and an increasing awareness about health and how diet plays into better living among consumers are expected to drive the global market for baked goods to a value of US$485 billion by 2020, according to Global Industry Analysts. Further, due to the health and wellness trend, whole grain, wheat-based, gluten-free products, and functional ingredient-based products are expected to drive growth for the category.

Over this time period, Europe is forecast to be the leading market in the world, and is projected to account for the highest revenue through 2020.

Additionally, the bread and rolls market in the Asian-Pacific region is expected to see growth of $3 billion between 2016 and 2021 due to urbanization and higher demand for gluten-free and convenient foods.

This deal for East Balt gives Grupo Bimbo a presence in some of the fastest growing baked goods markets, where the group will be able to capitalize upon these macro and dietary trends.

“This acquisition continues to fulfill our vision of expanding our global reach to better serve more consumers, with entry to eight new countries,” said Servitje. “Notably, East Balt enjoys long-standing strategic relationships, with the largest and most established QSR brands in the world. We look forward to welcoming all of East Balt’s associates to the Grupo Bimbo family and to our continued growth together,”

-Lynda Kiernan

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration please contact Ms. Kiernan at lkiernan@globalaginvesting.com.