Sara Lee to sell coffee business
US bakery and international consumer goods manufacturer Sara Lee has signed an agreement to sell its US retail coffee business as part of the company’s bid to redefine its over-stretched product portfolio and turn around its financial fortunes. The business, which accounted for around $213m (€175.6m) in sales this year, is to be bought by Italian company Segafredo Zanetti for $82.5m (€68m). The move is part of a company overhaul announced in February that will see it sell off businesses that currently account for around 40 per cent of total earnings. “With this sale, we are pleased to mark another important step in transforming Sara Lee into a more focused, more disciplined, high-performing company,” said Brenda Barnes, chief executive officer of Sara Lee. The transaction is due to be completed by the end of December 2005, subject to standard closing conditions . Throughout the 1980s and 1990s Sara Lee diversified widely, resulting in a business portfolio that strayed a long way from its core cake-making activity. As well as coffee, clothes and underwear, cosmetics, toiletries, shoe polish and air freshener products had resulted in operations that many industry experts had said provided no or very little room for all-important synergies. The transformation, a five-year plan due to continue to 2010, is “designed to dramatically improve the company”s performance and better position Sara Lee for long-term growth.” Earlier this month the company announced the intended sale of its European branded apparel business, which had total sales of nearly $1.2bn (€990m) in the financial year of 2005
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. In August, it announced the sale of its international cosmetics business, a division that had generated $470m (€387.6m) in sales in 2004. These two businesses, together with those of the company”s US coffee division and its European packaged meat division, represent a combined $8.2bn (€6.8m) in sales. The company said it intends to use the proceeds generated from these dispositions to fund investment in its growth businesses and strengthen its balance sheet. In August Sara Lee reported an increase in operating profits at its bakery division by 36 per cent over 2005, boosted by major cost-cutting.
Source: www.beveragedaily.com
