Sara Lee

March 13: Industry analysts were largely indifferent to news that Sara Lee Corp. was shopping its European household and personal care business. While admitting the division does not fit strategically with the rest of Sara Lee's mostly food-related businesses, analysts saw the potential divestiture as ill-timed and disadvantageous. -- Demitri Diakantonis

Dec. 4: Meanwhile, Sara Lee's divestiture program of noncore brands continued through 2008. The company said Dec. 3 it would sell its coffee brands to Farmer Brothers Co. for $45 million.

Nov. 20: Sara Lee is closing its Chicago kosher business by Jan. 30 and putting it on the block. Sara Lee wants to focus on categories where it has a "strategic competitive advantage," it said in a statement. In a management conference Nov. 5, Sara Lee said it will divest all its noncore assets including businesses that are "low-margin, low-growth and provide no opportunity for competitive advantage." -- Demitri Diakantonis

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On Sept. 17 Sara Lee said it had acquired Brazil's Café Moka SA, though terms were not disclosed, just weeks after Sara Lee said Sept. it sold its sauces and salad dressings businesses to Richelieu Foods Inc., a portfolio company of Greenwich, Conn. private equity firm Brynwood Partners.

Meanwhile, a Wall Street Journal item July 23 raised the possibility of Sara Lee bulking up with a deal for Interstate Bakeries Corp., the bankrupt company behind Wonder Bread and Twinkies. The company unveiled a fourth-quarter write-down of nearly $1 billion, stemming from high wheat costs and a weak economy, the Journal noted.

The Journal also dug into the larger problems at Sara Lee, including the ongoing breakup chatter, arguing a split up isn't as easy as it sounds. Meanwhile, activist hedge fund ValueAct Capital Partners LP in November filed for regulatory clearance to boost its Sara Lee stake. The Journal noted its stake is now nearly 6%, but the fund hasn't made any noise yet.

Back in 2006, as the company was continuing to carve away assets to focus on its core brands, Sara Lee unveiled the capital structure for its Hanesbrands Inc. spinoff July 20. Terms of the agreement called 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.

SWEET RETURNS

The month before, 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 was 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 didn'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.

Dealwatch executive summary
The Date	The Action
3.12.09 12.05.08 7.23.08 7.20.06	Next up: European household/personal care products.  Sara Lee's divestiture program continues. Could an IBC deal help Sara Lee? 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 earn-out.
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, press reports

 

 

 

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