The Downers Grove, Ill.-based company said it expects to complete the spin off by the end of June. It will begin by spinning off the shares of a U.S. subsidiary that holds the coffee and tea business. Immediately after that, the subsidiary will pay a $3.00-per-share special dividend to Sara Lee shareholders, or about $1.77 billion in total.
Sara Lee will then create a new Dutch parent company based in Amsterdam for the coffee and tea business and distribute its shares to Sara Lee shareholders. In line with standard legal structures, the U.S. coffee and tea company, while becoming a unit of the listed Dutch parent, will also be a holding company for the coffee and tea operations.
Sara Lee plans to release more information on the coffee and tea spinoff on March 14, including the name under which the newly incorporated Dutch entity will be traded.
It is not raising any new capital from the listing of the business, which posted €2.6 billion ($3.44 billion) in 2011 sales, of which 43% came from western Europe.
"With over 250 years of history, the Coffee & Tea business has solid market positions and deep roots in many European markets," said Sara Lee chairman Jan Bennink said in a statement. "Domiciling Coffee & Tea in the Netherlands allows management to be close to its key Western European markets and effectively manage its global portfolio."
Once that spinoff is finalized, the maker of Ball Park hot dogs and Jimmy Dean and Hillshire Farms sausages will spin off and rebrand its North American meat business under the name MeatCo. The meat company will be headed by Campbell Soup Co. executive Sean Connolly, the company announced in January. He currently serves as president of Campbell North America, that company's largest division.
Michiel Quarles van Ufford, a Netherlands-based spokesman for Sara Lee, said the company has opted for a complete separation of its meat and coffee and tea businesses so that each can focus on expanding in new markets. "This way the two parts can focus on the business they are in and concentrate on innovations," he said.
On Thursday, Dutch business daily Het Financieele Dagblad said the new listed tea and coffee company may take the name Douwe Egberts. Sara Lee's other coffee brands include Jacqmotte, Senseo and Maison du Café. Sara Lee said in January it is purchasing the remaining 50% of Senseo from joint venture partner Royal Philips Electronics NV for about $223 million.
Douwe Egberts traces its roots to the 1758 opening of grocery shop in the Dutch town of Joure by Egbert Douwe. Two years later when his son Douwe Egbert took over the shop, it branched out into processing coffee, tea and tobacco.
In 1978 Douwe Egberts became a unit of Consolidated Foods Corp., which changed its name to Sara Lee Corp. in 1985. Sara Lee generates 43% of its sales outside North America.
For advice on the Dutch tea and coffee spinoff Sara Lee turned to partners Rodd M. Schreiber and Gregg A. Noel of Skadden, Arps, Slate, Meagher & Flom LLP.
French mergers and acquisitions lawyer Laurent Faugerolas joined Dechert LLP. For other updates launch today's Movers & shakers slideshow.
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