Sara Lee Agrees to Sell Bakery Unit
By REUTERS
Published: November 9, 2010
The Sara Lee Corporation said on Tuesday that it would sell its North American bakery business to Grupo Bimbo of Mexico for $925 million, the latest move to shrink what was once a sprawling company with a product lineup including hot dogs and underwear.
After the sale, in which Bimbo will also assume $34 million in debt, Sara Lee will focus on meats and coffee, with brands like Hillshire Farm lunch meat and Senseo coffee pods.
The North American bakery unit generated $2.13 billion in sales in the fiscal year that ended Oct. 2, out of $10.79 billion for the entire company.
“It was not a make-it-or-break-it piece for Sara Lee,” said Timothy Ramey, an analyst at D. A. Davidson. He said that the company might look more attractive without that low-margin business, which has been pressured by higher wheat costs and discounts on supermarket store shelves.
Because of the sale of the bakery business, Sara Lee said it planned to accelerate its share buyback plans. It expects to complete the repurchase of $2.5 billion to $3 billion in stock by July 2012.
For Bimbo, the acquisition is part of its push to become one of the largest players in North American bakeries. The company bought the United States bread-making unit of George Weston Ltd. of Canada for $2.38 billion in December 2008.
The companies expect the deal to close in the first half of 2011.
Sara Lee also reported first-quarter results and said its income fell to $194 million, or 29 cents a share, from $287 million, or 41 cents a share, in the period a year earlier.
Sales in the period, which ended Oct. 2 and was the first quarter of its fiscal year, fell 0.5 percent, to $2.58 billion.
Shares of Sara Lee, which is based in Downers Grove, Ill., rose 41 cents, to $15.21.
nytimes.com |
