Takeover talk weighs heavily on Sara Lee stock

By Emily Bryson York
Posted Jan. 26 at 5:20 p.m.

Stock in Downers Grove-based Sara Lee Corp. took a dive Wednesday amid uncertainty about the company’s future. It closed down 5.7 percent, to $18.52.

Investors have been lifting the stock to 52-week highs since early December on reports that the company is likely to be broken up or sold.

Reuters, Bloomberg and the Wall Street Journal have reported that Sara Lee’s board was likely to move on sale offers or split the company into North American and European businesses as early as this week.

Sara Lee reportedly received offers from Sao Paulo-based JBS SA, the world’s largest meat producer, and the Blackstone Group, as well as a private equity consortium led by Apollo Global Management LP, and Connecticut-based entrepreneur C. Dean Metropoulos.

A Reuters report Wednesday morning that the company had rejected the Apollo-led offer weighed down Sara Lee stock. An afternoon New York Times report that JBS, smaller than Sara Lee and under onerous debt obligations, added to the decline.

According to analysts, Sara Lee’s stock price has a built-in expectation of a sale. If the company spurns all offers, the stock is expected to sink more. However, “I don’t think all is said and done, either,” said Morningstar analyst Erin Swanson.

“It’s a negotiating process,” she said, noting that Kraft didn’t come out with its best Cadbury offer right away. “I think there’s negotiating going on, and Sara Lee isn’t going to take the first offer that comes onto their plate, and the potential [acquirer] isn’t going to make their best offer right off the bat.”

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