- Mexican-based Grupo Bimbo and its U.S. arm, BBU, want to buy Sara Lee
- Bimbo and BBU will divest several Sara Lee products in areas where the firms go head-to-head
The nation's largest maker of sliced fresh bread products will have to divest some of its assets in order to acquire competitor Sara Lee, the Justice Department announced Friday.
In a settlement with the Mexican-based Grupo Bimbo and its U.S. corporation, BBU, based in Pennsylvania, the firm agreed to divest several Sara Lee products in select areas where the two large firms go head-to-head.
BBU makes products under a variety of trade names, including Thomas', Entenmann's, Boboli, Brownberry, Freihofer's and Stroehmann.
Sara Lee sells sliced bread under names that include Sara Lee Classic, Sara Lee Soft and Smooth, Sara Lee Delightful, Sara Lee Soft & Smooth and EarthGrains.
The Justice Department said it was taking a bite out of the acquisition as originally proposed because it would "substantially lessen competition in the sale of bagged, sliced fresh bread sold in retail stores" in several metropolitan areas.
Without the divestitures required by Justice in eight geographic markets, the combination of BBU and Sara Lee's North American Fresh Bakery business would likely lead to millions of Americans paying higher prices for sliced fresh bread," acting Assistant Attorney General Sharis Pozen said.
The areas of greatest concern to the government were Los Angeles, Sacramento, San Diego and San Francisco, all in California; Kansas City, Kansas; Omaha, Nebraska; Oklahoma City, Oklahoma; and Harrisburg/Scranton, Pennsylvania.
The government announcement of a tentative settlement said BBU and Sara Lee compete for shelf and display space in stores by offering lower prices and larger promotional discounts, which lower prices for consumers.
BBU and Sara Lee are respectively the largest and third-largest bakers and sellers of sliced fresh bread in the United States.
After a 60-day public comment period, a federal court judge in Washington will issue a ruling in the case.