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Sara Lee Sheds Bakery Trade - Analyst Blog

Sara Lee Corporation ( SLE ) slimmed down its portfolio yet again as it announced the completion of its sale of its fresh bakery business in Spain and Portugal to Grupo Bimbo SAB. Additionally, Grupo Bimbo also gets to own Sara Lee's seven manufacturing facilities.

Grupo Bimbo, considered to be the world's largest bread maker, paid a hefty $153 million for the transfer of business from Sara Lee. The deal was announced in October 2011.

The buyout of the bread unit from Sara Lee will help Grupo Bimbo capture the largest market share in Iberian Peninsula. Moreover, it will enhance the Company's international growth, banking upon the strong and established bakery business.

Not only will the buyout help Grupo Bimbo expand in Iberian Peninsula, but it will also help the company capture the largest market share in U.S. This also builds onto last year's $2.5 billion purchase of the U.S. baking operation, George Weston Ltd., and the acquisition of Argentina baker Alimentos Fargo in September 2011.

Mexico-based Grupo Bimbo, which is hailed as Latin America's largest producer of baked goods, has 102 plants operating over 1,000 distribution centers in 17 countries in America and Asia. It employs 1, 08, 000 people, who manufacture more than 7,000 products.

Sara Lee's Past Actions

Separately, Sara Lee plans to wind down the rest of its North American beverage business. It will discontinue its Senseo coffee brand in North Americas by March 31 of next year. Additionally, it will sell or close the remaining assets of the business.

Recently, Sara Lee has been chucking its redundant units one by one to focus on its most profitable food and beverage businesses.

It has also announced its decision to sell the French refrigerated dough unit. Franco-Canadian private equity firm, Sagard, has emerged as the final bidder in the deal.

Plans for Future

The company's policy of streamlining the portfolios to provide the best foundation for a strong and focused business continues, with more plans stored up for the future.

Sara Lee, is planning to split itself into two public companies in the first half of next year. The North American unit will be one company and include brands such as Jimmy Dean and Hillshire Farm. The international beverage business will be another company, and will include brands such as Pickwick and Maison du Cafe.

The U.S. based packaged food company has also decided to shed a major portion of its North American food service coffee and tea operations to The J. M. Smucker Company ( SJM ) for $350 million.

The deal is expected to close in early 2012 and 450 Sara Lee employees are expected to be transferred to Ohio-based J.M. Smucker.

Currently, Sara Lee holds a Zacks #3 Rank implying a short-term 'Hold' rating. On a long-term basis, we maintain a Neutral rating on the stock.

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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.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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