Sara Lee Corp. is pushing ahead with plans to separate its two main businesses, after offers from interested buyers came in below the company’s price expectations, people familiar with the matter said.

The expected move is likely to squelch what had been a mounting auction for the Downers Grove-based company. But it could set up opportunity for deals in the future.
Some of the parties may return to the bargaining table after Sara Lee separates its coffee and meat businesses, these people said. Acquiring units of Sara Lee, instead of the whole company, would be an easier deal for interested buyers to finance.

Brazilian beef processor JBS SA has yet to submit a revised offer for Sara Lee after facing challenges raising financing to push its bid between $19 and $20 per share, according to people familiar with the matter. JBS has a market capitalization of about $11 billion, which is roughly similar to Sara Lee’s $12 billion market cap.

JBS had previously offered about $17.50 a share for Sara Lee, which the company rejected because it was considered too low. Sara Lee has indicated it would be open to selling the company at a price in the lows $20s a share, people familiar with the matter said.

JBS is bidding for Sara Lee on its own, but is working with the Blackstone Group, which was interested in taking over most of Sara Lee’s coffee business, people familiar with the matter said. In that scenario, JBS would take over the meats division, these people said. JBS would still be interested in buying parts of Sara Lee, the people familiar with the matter said.

The Brazilian company is competing with a group led by private-equity firm Apollo Global Management LLC, which has so far declined to raise their offer of close to $19 a share, people familiar with the matter said. Sara Lee said that proposal was too low and was seeking a higher offer, these people said.

Joining Apollo in the Sara Lee bid are Bain Capital LLC, TPG Capital LP and investor C. Dean Metropoulos, a Connecticut entrepreneur who acquired Pabst Brewing Co. last year, these people said. The Apollo group has assembled about $8 billion in financing for the Sara Lee bid and has room to increase the offer, people familiar with the matter said. However, the consortium decided it didn’t want to pursue Sara Lee at a higher price, these people said.

Sara Lee is still open to offers it considers to be attractive and the parties didn’t rule out the possibility that they could come up with a higher offer later or another suitor could emerge, people familiar with the matter said. But that scenario is looking less likely and Sara Lee wants to resolve the issue of its future soon, these people said.

Sara Lee has been in flux since its chief executive, Brenda Barnes, stepped down last summer following a stroke. The board has searched for a successor, but the process has been delayed while the company weighs its strategic options.

The publication The Deal first reported Sara Lee’s decision.

– By Gina Chon, Anupreeta Das and Gregory Zuckerman