Sara Lee Corp. To Spin Off International Coffee And Tea Business

Sara Lee Corp. officials provided an update on its separation into two publicly-traded pure-play companies at the Deutsche Bank Global Consumer Conference in Paris, France.

Jan Bennink, executive chairman, and Marcel Smits, chief executive officer, both noted that the separation is progressing well, with key work underway to realize cost-saving opportunities and address new company structures. Bennink said that the decision had been made for Sara Lee to spin off its international coffee and tea business rather than spinning off the North American business. 

“This transaction is more than a spin-off of one business segment – we are really separating a global company into two, independent pure-play companies, which adds complexity as well as opportunity,” said Bennink in a prepared statement. “As we began to get into the details of separating the two businesses, we determined there are greater efficiencies to be gained from spinning off the international coffee business.”

Bennink also provided an overview of the company’s international coffee and tea business, and discussed plans for future growth. “We see important opportunities for growth coming from within our coffee and tea business,” added Bennink. “With a renewed focus on base coffee products, continued investment in new technology and commitment to build on the potential in the tea business, we see a bright future for this company.  We will maintain our focus on innovation and increase marketing and advertising." 

Smits discussed the company’s North American business, and focused on how the company will accelerate top-line growth while increasing margins. 

“We are continuing to look at price increases to recover our gross margins, but we’re also taking out significant costs from this business,” said Smits. “In addition, we will increase our marketing investment in our core brands, continue to expand from traditional products to premium offerings and focus our innovation efforts on convenience and ‘better for you’ products.”

In addition, Sara Lee provided an update on the sale of its North American fresh bakery business to Grupo Bimbo. The company said Grupo Bimbo has had substantive discussions with the Department of Justice and is working with them to agree upon potential remedies. Sara Lee believes that the transaction will close in early fiscal year 2012. 

 

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