TIDMSRL
Sara Lee Corp. (NYSE:SLE) today announced it has signed an
agreement to sell its North American Fresh Bakery business to Grupo
Bimbo (BMV:BIMBO), one of the world's largest baking companies, for
$959 million. The transaction, which is subject to customary
closing conditions and regulatory clearances, is anticipated to
close during the first half of calendar year 2011.
"This strategic move will further enable Sara Lee to
aggressively drive growth in our core coffee and protein
categories, organically and through acquisitions," said Marcel
Smits, interim chief executive officer of Sara Lee Corp. "In
addition to our $2.5 to $3.0 billion share repurchase program, last
week's dividend increase and our strong stock price performance
over the past year, this is the another example of Sara Lee
pursuing shareholder value."
Both Sara Lee and Grupo Bimbo are committed to further
developing the strong brand equity that has been built up in the
Sara Lee name over many decades. As a part of this transaction,
Sara Lee will retain the right to sell Sara Lee branded frozen
desserts and protein products, like sliced deli meats. Grupo Bimbo
will have the rights to the Sara Lee brand in the fresh baked goods
category globally, with the exception of Western Europe, Australia
and New Zealand.
"We're very proud of all that our Fresh Bakery employees have
achieved over the years. We created a great brand in the U.S. fresh
bakery category, while establishing a strong reputation as a
category captain and a superior customer partner," added CJ
Fraleigh, chief executive officer, Sara Lee North America. "This
transaction will allow the combined Grupo Bimbo and Sara Lee Bakery
business to focus on the fresh bakery category and winning in the
marketplace. With the majority of our associates dedicated solely
to our coffee and protein businesses, we are focused on driving
growth in these core categories while continuing to strengthen our
heritage frozen dessert business."
In addition to the national fresh bakery brand Sara Lee, the
acquisition provides Grupo Bimbo with a collection of leading
regional bakery brands, such as Grandma Sycamore's, Heiner's and
Rainbo. As part of the transaction, all of Sara Lee's approximately
13,000 North American Fresh Bakery employees will transfer to Grupo
Bimbo. The sale also includes 41 plants in the U.S. and
approximately 4,700 bakery routes, as well as a small piece of
foodservice bakery business, which is in the North American
Foodservice business. In the twelve months ended October 2, 2010,
the North American Fresh Bakery business generated $2.1 billion in
adjusted net sales1 and $38 million in adjusted operating segment
income¹.
Forward-Looking Statements
This release contains forward-looking statements regarding Sara
Lee's business prospects and future financial results, including
statements contained under the heading "Guidance." In addition,
from time to time, in oral statements and written reports, the
corporation discusses its expectations regarding the corporation's
future performance by making forward-looking statements preceded by
terms such as "anticipates," "we are confident," "expects,"
"likely" or "believes." These forward-looking statements are based
on currently available competitive, financial and economic data and
management's views and assumptions regarding future events.
Forward-looking statements are inherently uncertain, and investors
must recognize that actual results may differ from those expressed
or implied in the forward-looking statements. Consequently, the
corporation wishes to caution readers not to place undue reliance
on any forward-looking statements. Among the factors that could
cause Sara Lee's actual results to differ from such forward-looking
statements are those described under Item 1A, Risk Factors, in Sara
Lee's most recent Annual Report on Form 10-K and other SEC Filings,
as well as factors relating to:
-- Sara Lee's share repurchase and other capital plans, such as (i)
future opportunities that the Board may determine present
greater
potential value to shareholders than the current capital plans
and
targets, including without limitation potential acquisitions,
joint
ventures or other corporate transactions, and investments in
Sara
Lee's business; (ii) future operating or capital needs that
require a
more significant outlay of cash than currently anticipated; or
(iii)
future changes in facts or circumstances that may impact the
anticipated accounting treatment of such activities;
-- Sara Lee's relationship with its customers, such as (iv) a significant
change in Sara Lee's business with any of its major customers,
such as
Walmart, its largest customer, including changes in how such
customers
manage their suppliers and the level of inventory these
customers
maintain; and (v) credit and other business risks associated
with
customers operating in a highly competitive retail
environment;
-- The consumer marketplace, such as (vi) significant competition,
including advertising, promotional and price competition;
(vii)
changes in consumer behavior due to economic conditions, such as
a
shift in consumer demand toward private label; (viii)
fluctuations in
the cost of raw materials, Sara Lee's ability to increase or
maintain
product prices in response to fluctuations in cost and the
impact on
Sara Lee's profitability; (ix) the impact of various food
safety
issues and regulations on sales and profitability of Sara
Lee
products; and (x) inherent risks in the marketplace associated
with
new product introductions, including uncertainties about trade
and
consumer acceptance;
-- Sara Lee's international operations, such as (xi) impacts on reported
earnings from fluctuations in foreign currency exchange
rates,
particularly the euro; (xii) Sara Lee's generation of a high
percentage of its revenues from businesses outside the United
States
and costs to remit these foreign earnings into the U.S. to fund
Sara
Lee's domestic operations, share repurchase plans, dividends,
debt
service and corporate costs; (xiii) the impact on Sara Lee's
business
of its agreement to sell its Fresh Bakery business segment and
its
receipt of binding offers to purchase a large portion of its
H&BC
business, its intent to divest the remainder of that business
and any
inability to complete these transactions or to divest the
remaining
H&BC businesses on favorable terms; and (xiv) difficulties
and costs
associated with complying with U.S. laws and regulations, such
as
Foreign Corrupt Practices Act, applicable to entities with
overseas
operations, and different regulatory structures and unexpected
changes
in regulatory environments overseas, including without
limitation
potentially negative consequences from changes in
anti-competition and
tax laws; and (xv) Sara Lee's ability to continue to source
production
and conduct manufacturing and selling operations in various
countries
due to changing business conditions, political environments,
import
quotas and the financial condition of suppliers;
-- Previous business decisions, such as (xvi) Sara Lee's ability to
generate margin improvement through cost reduction and
efficiency
initiatives, including Project Accelerate and the outsourcing
of
significant portions of our financial transaction processing,
global
IT, and global indirect procurement activities; (xvii) Sara
Lee's
ability to achieve planned cash flows from capital expenditures
and
acquisitions and the impact of changing interest rates and the
cost of
capital on the discounted value of those planned cash flows,
which
could impact future impairment analyses; (xviii) credit ratings
issued
by the three major credit rating agencies, the impact of Sara
Lee's
capital plans and targets on such credit ratings and the impact
these
ratings and changes in these ratings may have on Sara Lee's cost
to
borrow funds, access to capital/debt markets, and ability to
complete
the planned share repurchase; (xix) Sara Lee's plan to
refinance
significant outstanding indebtedness in the next two years and
the
impact of potential changes in the credit environment; (xx) Sara
Lee's
plan to repurchase a significant amount of its common stock and
the
impact of such repurchases on its earnings, cash flow and
credit
ratings; (xxi) the settlement of a number of ongoing reviews of
Sara
Lee's income tax filing positions in various jurisdictions
and
inherent uncertainties related to the interpretation of tax
regulations in the jurisdictions in which Sara Lee transacts
business;
and (xxii) changes in the expense for and contingent
liabilities
relating to multi-employer pension plans in which Sara Lee
participates; and
-- Uncertainty relating to the chief executive officer position and the
fact that Sara Lee's board has initiated a process to identify
a
permanent successor.
In addition, Sara Lee's results may also be affected by general
factors, such as economic conditions, political developments,
interest and inflation rates, accounting standards, taxes and laws
and regulations in markets where the corporation competes. Sara Lee
undertakes no obligation to publicly update any forward-looking
statements, whether as a result of new information, future events
or otherwise.
About Sara Lee
Each and every day, Sara Lee (NYSE: SLE) delights millions of
consumers and customers around the world. The company has one of
the world's best-loved and leading portfolios with its innovative
and trusted food and beverage brands, including Ball Park, Douwe
Egberts, Hillshire Farm, Jimmy Dean, Sara Lee and Senseo.
Collectively, our brands generate nearly $11 billion in annual net
sales. Sara Lee has approximately 33,000 employees in its
continuing operations worldwide. Please visit www.saralee.com for
the latest news and in-depth information about Sara Lee and its
brands.
About Grupo Bimbo
Grupo Bimbo is one of the largest baking companies in the world
in terms of production and sales volume. As the market leader in
the Americas, Grupo Bimbo has 98 plants and 600 distribution
centers strategically located in 17 countries throughout the
Americas and Asia. Its main product lines include sliced bread,
buns, cookies, snack cakes, English muffins, bagels, pre-packaged
foods, tortillas, salted snacks and confectionery products, among
others. Grupo Bimbo produces over 7,000 products and has one of the
most extensive direct distribution networks in the world, with more
than 39,000 routes and more than 102,000 employees. Grupo Bimbo's
shares have traded on the Mexican Stock Exchange since 1980 under
the ticker symbol BIMBO.
North American Fresh Bakery Fiscal 2010 Results
Reconciliation of Net Sales and Operating Segment Income from as
Reported to Adjusted
Twelve Months ended Dollar Change Percent Change
(in millions)
October 2, September 26,
2010 2009
Net Sales $ 2,103 $ 2,170 $ (67 ) (3.1 )%
Less:
Increase/(decrease)
in net sales from:
Impact of 53rd week 52 - 52
Adjusted net sales $ 2,051 2,170 $ (119 ) (5.5 )%
Operating segment $ 29 $ 23 $ 6 22.2 %
income
Operating margin % 1.4 % 1.1 % 0.3 %
Less:
Increase/(decrease)
in operating segment
income from:
Exit activities, - (6 ) 6
asset and
business
dispositions
Transformation/Accelerate - (1 ) 1
charges
Accelerated (2 ) - (2 )
depreciation
Pension partial (16 ) (38 ) 22
withdrawal
liability charge
Pension curtailment 3 - 3
gain
Impact of 53rd week 6 - 6
Adjusted operating $ 38 $ 68 $ (30 ) (45.0 )%
segment income
Adjusted operating 1.8 % 3.1 % (1.3 )%
margin
Depreciation and $ 70 $ 70
amortization
(excluding
accelerated
depreciation)
1 "Adjusted net sales" and "adjusted operating segment income"
are non-GAAP measures and are reconciled to the GAAP measures "net
sales" and "operating segment income" at the end of this
release.
Sara Lee Corp.
Media: Jon Harris, +1 630-598-8661
Analysts: Aaron Hoffman, +1 630-598-8739
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