Sara Lee to Pay Off Debt - Analyst Blog


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Sara Lee Corporation ( SLE ) recently announced that it will pay off upto $970 million of its outstanding debt.

The food and coffee giant will redeem all of its 3.875% Notes due 2013 on April 6, 2012. The notes carry an aggregate outstanding principal amount of $500 million. The company has also begun a cash tender offer to purchase three series (6 1/8% Notes due 2032, 4.10% Notes due 2020 and 2.75% Notes due 2015) of its outstanding debt securities. The aggregate principal amount of the three series of the debt securities will be up to $470 million. The offer will expire on April 2 at midnight.

Sara Lee plans to split the company into two publicly-traded companies: an international coffee and tea business and a North American retail, foodservice and specialty meats business. The widely awaited spin-off will be completed by the end of June 2012. Post spin-off, the international Coffee and Tea business will be domiciled in the Netherlands and will move its headquarters to Amsterdam in the second half of 2012.

The spin-off is part of Sara Lee's plan to trim its portfolio in order to provide the best foundation for a strong and focused business. Sara Lee has been shedding its redundant units one by one to focus on its most profitable food and beverage businesses.

Among the latest deals, in early January this year, Sara Lee completed the sale of the majority of its North American Foodservice coffee and tea operations to The J.M. Smucker Company ( SJM ) in an all-cash transaction. In December 2011, Sara Lee divested its fresh bakery business in Spain and Portugal to Mexico's Grupo Bimbo S.A.B. de C.V.

Our Recommendation

We currently have a Neutral recommendation on Sara Lee Corporation. The stock carries a Zacks #2 Rank (short-term 'Buy' rating).

SMUCKER JM ( SJM ): Free Stock Analysis Report
SARA LEE ( SLE ): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
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