Tags: Sara | Lee | shareholders | SLE

Sara Lee Spinoff Aims to Boost Shareholders

By    |   Monday, 19 Dec 2011 08:57 AM

Food manufacturer and marketer Sara Lee (SLE) is in the process of taking dramatic steps to change the structure of the company and, it hopes, to boost shareholder value. To accomplish the board of directors’ goals, the company has been selling off divisions in a plan to divide the company in two.

Sara Lee had accumulated more than 50 brands in bakery, beverage, and meats categories of food sales. The company has both U.S. and internationally based food wholesale and food service businesses.

In January 2011, the company announced a plan to sell off several non-core business lines and then spin off the company into two separate businesses early in 2012. For comparison purposes, Sara Lee generated revenue of $8.7 billion in 2010.

When the spinoff occurs, Sara Lee management has announced shareholders will receive a one-time dividend of $3 per share as well as shares of the two new companies. Funds for the dividend have been accumulated by numerous sales of other business assets and businesses.

The new Sara Lee

The spinoff announcement stated the North America Retail and Food Service business would retain the Sara Lee name after the spinoff. That portion of the company has projected revenue of $4.2 billion in 2011. The company retains several of the growth brands, including Jimmy Dean, Hillshire Farms and Ball Park. The 2012 first quarter earnings report, through Sept. 30, referred to this portion as the Meat division.

The other company post-spinoff was referred to as the International Beverage and Bakery business, more recently called Coffee & Tea, with projected revenues of $4.8 billion. This division reported a 20 percent year-over-year operating income gain in the 2012 first quarter, while the Meat division saw operating income decline by 4 percent.

The most recent analyst comment on Sara Lee was a reiteration of a buy rating by the analysts at Deutsche Bank.

The company reports next on Feb. 2.

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Food manufacturer and marketer Sara Lee (SLE) is in the process of taking dramatic steps to change the structure of the company and, it hopes, to boost shareholder value. To accomplish the board of directors goals, the company has been selling off divisions in a plan to...
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2011-57-19
Monday, 19 Dec 2011 08:57 AM
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