Bimbo Leads Mexico Declines on Stock Offering ProposalJonathan Roeder and Dale Quinn
Grupo Bimbo SAB fell the most among major Mexican stocks after the world’s biggest bread maker unveiled a proposal to sell new shares.
Bimbo fell 2.1 percent to 41.94 pesos at 1:09 p.m. in Mexico City. That was the steepest decline today on Mexico’s benchmark index, which gained 0.5 percent.
The bread maker, whose leverage jumped in the second quarter after it bought Maple Leaf Foods Inc.’s Canadian baked-goods business, will seek shareholder approval on Sept. 18 for a proposal to sell stock locally, in the U.S. or another overseas market, the company said in a filing to the Mexican exchange. Net debt rose to 3.34 times earnings before interest, taxes, depreciation and amortization in the second quarter from 2.23 in the previous quarter, data compiled by Bloomberg show.
“It’s clear that the share offering it’s planning to do is to reduce its current debt,” said Aldo Miranda, an equity trader at CI Casa de Bolsa in Mexico City in an e-mail. “In the short-term, it’s not good for current shareholders.”
Bimbo plans to sell A series ordinary shares in a global offering. The prospectus didn’t specify how much the company plans to raise or when offering could take place.
“Until we know the details on Sept. 18, we won’t know be able to know the total impact, but it’s clear there will be dilution,” Miranda wrote.
Since 2009, Bimbo has bought Sara Lee Corp.’s North American bakeries, George Weston Ltd.’s U.S. operations, Hostess Brands Inc.’s Beefsteak bread brand and Hillshire Brands Co. North American Fresh Bakery business.