Sara Lee Corporation
(
SLE
) recently announced that its widely awaited spin-off of the
international Coffee and Tea business will be completed by the end
of June 2012. Sara Lee had revealed plans to split the company into
two publicly-traded companies in January this year: an
international coffee and tea business and a North American retail,
foodservice and specialty meats business.
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. Sara Lee's subsidiary, DE
International Holdings, will hold all the assets related to the
Coffee & Tea business and will become a subsidiary of the new
Dutch company. In addition, all of the outstanding ordinary shares
of DE International will be owned by the shareholders of Sara Lee.
DE International will also pay a special dividend of $3.00 to Sara
Lee shareholders, once the spin-off is completed. Following the
spin-off, Sara Lee expects to reduce its current deferred tax
liabilities by approximately $700 million.
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. The company has more plans stored up for the future. 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. Per the terms of the transaction Sara Lee's
fresh bakery brands in Spain and Portugal as well as seven
manufacturing facilities have been divested.
Our Recommendation
We currently have a Neutral recommendation on Sara Lee
Corporation. The stock carries a Zacks #3 Rank (short-term 'Hold'
rating).
SMUCKER JM (
SJM
): Free Stock Analysis Report
SARA LEE (
SLE
): Free Stock Analysis Report
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