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Published July 21, 2006 at 12:12 PM
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 Maybe somebody does like Sara Lee.
As the company continues to carve away assets to focus on its core brands, Sara Lee Corp., unveiled the capital structure for its Hanesbrands Inc. spinoff Thursday, July 20. Terms of the agreement call for the branded apparel unit to borrow $2.6 billion to establish itself independently and pay its cake-making parent $2.4 billion in return.
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SWEET RETURNS
Last month, Sara Lee unhanded its European meats business to a joint venture between Smithfield Foods Inc. and Oaktree Capital Management LLC, in exchange for $614 million.
The move is the latest in a massive overhaul, launched in February 2005, to cut units that account for 40% of Sara Lee's annual revenue to enable the company to focus on its household products and food businesses. While to date, most units have drawn less-than-ideal returns, the meats biz went for more than the $400 million to $500 million range one source had predicted, and told The Deal in May.
PAYING DEARLY
Some others haven't fared quite as well.
- Also in May, Sara Lee announced handing over its Courtaulds apparel business in the U.K. to a group led by PD Enterprise Ltd. However, instead of realizing a gain, Sara Lee took a $33 million related charge and assumed at least $483 million in underfunded pensions.
- In November, Boca Raton, Fla.-based buyout shop Sun Capital Partners said it had to take the company's U.K. branded apparel business for $117 million, plus up to $117 million in additional payments. Earlier in the year, market sources had expected the unit to reap between $400 million and $800 million.
- The month before, Sara Lee sold its U.S. coffee business to Segafredo Zanetti SpA for $82.5 million, less than the 1 times sales, or $213 million, some analysts expected it to draw.
- In August, the company sold off its direct sales unit to Tupperware Corp., for $557 million, but realized less than the $650 million that at least one analyst had expected.
STILL TO COME
- In its last move to date, the Chicago-based conglomerate said in late May that it plans to spin off its branded apparel unit into a separate company called Hanesbrands Inc. by the end of September. The unit's performance as a stand-alone entity should be interesting to watch.—Carolyn Murphy
| Dealwatch executive summary |
The Date |
The Action |
| 7.20.06 |
The Hanesbrands spinoff will return $2.4 billion to Sara Lee. |
| 6.27.06 |
Sara Lee announces unhanding its European meats unit to Smithfield Foods and Oaktree Capital. |
| 5.24.06 |
Sara Lee plans to spin off its branded apparel unit. |
| 5.09.06 |
Sara Lee sells its Courtaulds apparel business to a PD Enterprise Ltd.-led consortium, taking a$33 million hit and assuming $483 million in pension plans. |
| 5.05.06 |
Smithfield publicly shows interest in Sara Lee's meats. |
| 11.17.05 |
Sun Capital takes Sara Lee's U.K. branded apparel business for $117 million, plus an earnout. |
| 10.28.06 |
Sara Lee sells its coffee business for $82.5 million in cash. |
| 1.23.06 |
Tupperware Corp. takes the company's direct sales business for $557 million. |
| 2.2005 |
Sara Lee unveils plans for its massive overhaul. |
Source: The Deal |
Comments
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I have done several web development projects for Sara Lee/ HanesBrands and am therefore following the spinoff with curiosity. I have begun gathering pertinent Spinoff information and following new developments in case anyone is interested:
HanesBrands
Cheers,
Alex