Sara Lee said to be moving ahead on break-up plan

By Dow Jones Newswires-Wall Street Journal
Posted Jan. 7 at 6:02 a.m.

Sara Lee Corp. is moving ahead with plans to split up its meats and coffee businesses into two separate companies after it rejected Brazilian beef processor JBS SA’s takeover offer last month, people familiar with the matter said.

JBS hasn’t ruled out its interest in buying the company, which has a market capitalization of about $11 billion, and could yet come back with a higher offer, these people said. But they cautioned that JBS, which has a market cap of about $10 billion, could have trouble securing financing for a deal.

No other potential buyers have emerged for Sara Lee, which has led its executives to believe that a break-up of the two core businesses is the best course of action, the people familiar with the matter said. Separating the two divisions could make it easier for other buyers, including JBS, to make a play for the coffee and meats businesses independently, they said.

Sara Lee’s coffee business, which has brands in Europe and Brazil, is among its most attractive assets, with $3 billion in revenue. The meats business had $2.82 billion in sales.

Sara Lee declined to comment. JBS didn’t respond to a request for comment.

Sara Lee, which has wrestled for years with its strategic direction and anemic stock performance, has focused in recent years on trimming its businesses to focus on beverages and meats.

Sara Lee’s former chief executive, Brenda Barnes, spearheaded many of the recent changes at the company, but its future came into question after Barnes suffered a stroke and stepped down last summer.

Operating under an interim CEO, the company would rather not hire a permanent replacement if it intends to break up anyway, said the people familiar with the matter.

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