Tags: US | Sara | Lee | Sale

Sara Lee to Sell Bakery Unit as Profit Falls Short

Tuesday, 09 Nov 2010 09:07 AM

Sara Lee reported lower-than-expected quarterly profit on Tuesday and said it would sell its North American bakery business to Mexico's Grupo Bimbo for $959 million.

Sara Lee said the sale would help it focus on its core coffee and protein businesses and make acquisitions.

The company said net income for the first quarter of fiscal 2011 fell to $194 million, or 29 cents per share, from $287 million, or 41 cents per share, a year earlier. The net income decline of 32 percent was weighed down by higher commodity costs and increased marketing spending.

Adjusted earnings from continuing operations were 13 cents per share, missing analysts' average estimate of 17 cents per share, according to Thomson Reuters I/B/E/S. Net sales slipped to $2.58 billion from $2.59 billion.

Sara Lee said that under terms of the deal with Bimbo, it would retain the right to sell Sara Lee branded frozen desserts and protein products, like sliced deli meats.

Grupo Bimbo will have rights to the Sara Lee brand in fresh baked goods globally, excluding Western Europe, Australia and New Zealand. About 13,000 employees will be transferred.

Grupo Bimbo, based in Mexico City, is the largest food company in Mexico and a major baker in the U.S. and Central America. Its 2009 revenue was $8.6 billion. Its brands include Bimbo bread and Lara cookies and crackers.

The deal gives Grupo Bimbo 41 additional plants in the U.S. and about 4,700 delivery routes. It already has 39 plants in the U.S. and 98 worldwide. The business accounted for about $2.1 billion in adjusted net sales and $38 million in adjusted income in the year ended Oct 2.

The deal is expected to close in the first half of 2011.

© 2017 Thomson/Reuters. All rights reserved.

   
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Sara Lee reported lower-than-expected quarterly profit on Tuesday and said it would sell its North American bakery business to Mexico's Grupo Bimbofor $959 million. Sara Lee said the sale would help it focus on its core coffee and protein businesses and make...
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2010-07-09
Tuesday, 09 Nov 2010 09:07 AM
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