Fitch: Bimbo's Acquisition of Panrico Manageable for its Credit Quality

viernes 10 de julio de 2015 14:32 GYT

(The following statement was released by the rating agency) MONTERREY/NEW YORK, July 10 (Fitch) Fitch Ratings believes that the agreement reached by Grupo Bimbo S.A.B. de C.V. (Bimbo) to acquire 100% of the common shares of Panrico S.A.U. (Panrico) in Spain and Portugal is manageable with its current credit quality given the size of the acquisition, which is valued at EUR190 million. The transaction excludes the brands of the packaged bread category and includes well-positioned brands in the sweet baked goods, buns and rolls categories, as well as non-branded packaged bread, with estimated annual revenues of EUR280 million. Fitch views this acquisition as positive to Bimbo's operations as it will strengthen its business position in those countries and should provide synergies with complementary manufacturing plants, distribution networks and product portfolio. In addition, Fitch does not foresee a material change in our previous estimation of Bimbo's total debt-to-EBITDA trending below 3.0x in the next 12 to 18 months. Panrico is one of the leading producers in the baking industry in Spain and Portugal participating in the categories of packaged bread, sweet baked goods and buns and rolls. The acquisition includes known brands such as Donuts, Qe!, Bollycao, La Bella Easo, and Donettes, among others, and excludes its brands in the packaged bread category. The company operates nine production facilities and has more than 2,000 employees. The acquisition is subject to customary regulatory approvals and is expected to close in the fourth quarter of 2015. 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 which provides a key competitive advantage. The ratings also consider the company's stable operations with historically low volatility in revenues and margins, diversified revenue base and positive free cash flow (FCF) generation. Bimbo's ratings are constrained by higher debt levels associated with its acquisition strategy, exposure to raw material prices and foreign exchange volatility of its USD-denominated costs, and changes in tax laws associated to a further increase in taxes on high-calorie food products in Mexico. Fitch currently rates Bimbo as follows: --Long-term Issuer Default Rating (IDR) at 'BBB'; --Local currency long-term IDR at 'BBB'; --National long-term rating at 'AA+(mex)'; --USD800 million senior notes due 2020 at 'BBB'; --USD800 million senior notes due 2022 at 'BBB'; --USD800 million senior notes due 2024 at 'BBB'; --USD500 million senior notes due 2044 at 'BBB'; --Local Certificados Bursatiles Issuances at 'AA+(mex)'. The Rating Outlook is Stable. Contact: Primary Analyst Rogelio Gonzalez Director +52-81-8399-9100 Fitch Mexico S.A. de C.V. Prol. Alfonso Reyes 2612, 8th Floor Monterrey, N.L., Mexico Secondary Analyst Johnny da Silva Director +1-212-612-0367 Media Relations: Alyssa Castelli, New York, Tel: +1 (212) 908 0540, Email: Additional information is available on ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.