Sara Lee Evaluates Options for International Bakery Unit
Sara Lee Evaluates Options for International Bakery Unit
Daniel Acker/Bloomberg
The international bakery unit accounted for less than 10 percent of Sara Lee’s $10.8 billion in sales in the year ended June 2010..
The international bakery unit accounted for less than 10 percent of Sara Lee’s $10.8 billion in sales in the year ended June 2010.. Photographer: Daniel Acker/Bloomberg
Sara Lee Corp. (SLE), the U.S. food maker planning to break itself up, said it’s evaluating strategic options for its international bakery and North American refrigerated dough units.
The moves will help Sara Lee’s two proposed separate businesses, which are focused on meat and coffee, gain “the best platform for a strong and independent future,” Sara Lee said in a statement today.
The international bakery unit operates in four countries and accounted for less than 10 percent of Sara Lee’s $10.8 billion in sales in the year ended June 2010. The 72-year-old maker of Ball Park hot dogs said in January that it will split itself in two, spinning off its meat brands like Jimmy Dean and Hillshire Farms into a new public company by early 2012.
“The buyers are not likely international food companies - it will likely be a local buyer in my view,” Christopher Growe, an analyst at Stifel Nicolaus & Co., said in an interview. The St. Louis-based analyst recommends holding the the shares.
Sales at the international bakery unit declined 7 percent in the third quarter ended April 2 because of slower sales in the Spanish business, which sells bread under the Bimbo brand. Sara Lee has lowered prices in Spain to boost sales, and also wants to shift its unionized Spanish employees to become independent contractors to lower expenses. The operations include fresh bakery in Portugal, refrigerated dough in France, and desserts in Australia.
Previous Overtures
Prior to its decision to split the company, Sara Lee’s board rejected approaches from JBS SA (JBSS3), KKR & Co. and an Apollo Global Management LLC group that valued Sara Lee at as much as $18.50 a share, according to people with knowledge of the negotiations at the time.
Sara Lee rose 14 cents to $19.28 at 4:01 p.m. in New York Stock Exchange composite trading. The shares have gained 10 percent this year, compared with a 6.2 percent increase for the Standard & Poor’s 500 Index.
Full-year earnings, excluding some items, will now be at least 79 cents a share, down from a previous minimum of 85 cents, Sara Lee said. The company is raising prices on most products, a move that may alienate some customers. Analysts on average project 86 cents, according to a Bloomberg survey.
Sara Lee, along with food makers such as Kellogg Co. (K) and Kraft Foods Inc. (KFT), has raised prices amid surging costs for raw ingredients such as coffee and meat. Wells Fargo Securities analyst Eric Serotta estimates that Sara Lee’s commodity costs will increase 28 percent this year.
To contact the reporter on this story: Matthew Boyle in New York at Mboyle20@bloomberg.net.
To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net
Rate this Page