Sara Lee to sell baking unit for $959M

CHICAGO – Sara Lee Corp. is selling its North American Fresh bakery unit to baking company Grupo Bimbo for $959 million as it looks to concentrate more on its coffee and meat businesses.
The Downers Grove, Ill.-based maker of Jimmy Dean sausages and Sara Lee breads said Tuesday that the sale will allow it to aggressively expand other businesses through acquisitions and other means.
In the twelve months ended Oct. 2, the North American Fresh Bakery business posted $2.1 billion in adjusted net sales.
But Sara Lee’s breads have lagged rivals like Pepperidge Farm during the recession.
The transaction, which includes 41 U.S. plants, lets Sara Lee keep the right to sell Sara Lee brand frozen desserts and meat products such as sliced deli meats.
The entire Sara Lee brand name does not shift with the sale.
Grupo Bimbo will have rights to the Sara Lee brand in fresh baked goods globally, excluding Western Europe, Australia and New Zealand. About 13,000 employees will be transferred.
Grupo Bimbo, based in Mexico City, is the largest food company in Mexico and a major baker in the U.S. and Central America. Its 2009 revenue was $8.6 billion.
Its brands include Bimbo bread and Lara cookies and crackers.
The deal gives Grupo Bimbo 41 additional plants in the U.S. and about 4,700 delivery routes.
It already has 39 plants in the U.S. and 98 worldwide.
The business accounted for about $2.1 billion in adjusted net sales and $38 million in adjusted income in the year ended Oct 2.
Besides the Sara Lee brand, the acquisition also gives the Mexican baker regional brands including Grandma Sycamore’s and Rainbo.
The deal is expected to close in 2011’s first half.
Sara Lee also said Tuesday morning that its first-quarter net income declined 32 percent, weighed down by higher commodity costs and increased marketing spending.
Sara Lee earned $192 million, or 29 cents per share.
That compares with $284 million, or 41 cents per share, a year earlier.
Adjusted earnings from continuing operations were 13 cents per share. Analysts expected earnings of 17 cents per share.
Revenue for the period ended Oct. 2 dipped less than 1 percent to $2.58 billion. That beat Wall Street’s $2.48 billion.

Chicago Tribune