Speculation is Over: Sara Lee to Split
Sara Lee Corp.'s board of directors on Jan. 28 announced intentions to divide the company into separate, publicly traded companies, one primarily North American (and heavily into deli meats) and one European (and primarily into coffee). The split is expected in early 2012.
Sara Lee's North American retail and North American foodservice businesses (excluding the North American beverage business) will be spun off, tax-free, into a new public company that will retain the Sara Lee name. Its leading brands will include Sara Lee, Jimmy Dean, Ball Park, Hillshire Farm, Chef Pierre and State Fair. The new company would have approximately $4.1 billion in revenue.
The yet to be named other company will consist of Sara Lee's current international beverage and bakery businesses, as well as the North American beverage business. Its leading brands will include Douwe Egberts, Senseo, Pickwick, Maison du Café, L'Or, Café Pilão, Marcilla and Bimbo. This entity would have reported approximately $4.6 billion in revenue.
In conjunction with the planned separation, the board of directors intends to declare a $3 per share special dividend.
"Today's announcement is a logical step following the divestment of our international household and body care business and the announced sale of our North American fresh bakery business," said Chairman James Crown. "We have carefully considered various strategic alternatives, including unsolicited indications of interest in the company. We believe that the spin-off, plus the one-time special dividend, offers the greatest potential for delivering long-term shareholder value."
The board of directors also immediately appointed Jan Bennink, 54, as a director and executive chairman, with primary responsibility to implement the spin-off. So he replaces Crown, who will continue on the board and will serve as lead independent director.
Bennink has extensive executive leadership experience in the food & beverage and consumer packaged goods industries, the company said. Most recently, he served as chief executive officer of Royal Numico and has also held key management positions with Groupe Danone, Benckiser Gmbh and Procter & Gamble. He previously served on the advisory board of ABN AMRO, as well as on the boards of various global companies, including Kraft Foods. He is currently a director of Coca-Cola Enterprises.
Also immediately, Marcel Smits, 49, was named CEO. He had been the interim CEO since May 2010, when Brenda Barnes stepped down for medical reasons. He will be responsible for day-to-day operations until the separation.
At that time, CJ Fraleigh, 47, currently CEO for North America, will be named CEO of the new Sara Lee, the North American retail and foodservice business.
Back to immediate needs, Mark Garvey, 46, who has been interim chief financial officer, was named permanent CFO.