Sara Lee is to purchase America’s second-biggest bakery Earthgrains for $1.8 billion plus around $950 million in assumed debt – the largest acquisition in its history.

The move represents a turnaround in the consumer goods multinational’s recent strategy of selling non-core products. Having got rid of 15 businesses, said Sara Lee president/chief executive C Steven McMillan, it is now time for expansion.

With the purchase of Earthgrains, Sara Lee obtains brands such as IronKids, Grant’s Farm and Earth Grains. The bakery made $2.6bn in sales in the US and Europe last year, trailing only Interstate Bakeries in America. Sara Lee estimates that the acquisition will increase its annual bakery sales fourfold to $3.4bn.

The deal is still subject to regulatory approval, but as the two companies have few conflicting interests there is expected to be little opposition.

News source: Wall Street Journal