Milling & Baking News Corporate Profiles - October 2011 - (Page 114)

Company Overview Sara Lee Corp. ‘Growing’ from $16 billion to $4.5 billion company W hether or not it has been a success, the long road of Downers Grove, Ill.-based Sara Lee Corp. from massive diversified consumer products company to two independent publicly-traded companies is steadily moving toward a conclusion. In a presentation in September 2011, Marcel Smits, Sara Lee’s chief executive officer, sought to put the company’s transformation into perspective choosing words he realized may strike many as counterintuitive. Speaking at the Barclays Capital Back to School Consumer Conference Sept. 8, Mr. Smits said, “Look, we used to be a $16 billion company, and we’re going to be a $4.5 billion company. And the feeling shouldn’t be that we’ve shrunk from $16 billion to $4 billion. The feeling should be that we’ve actually grown to $4.5 billion. So we should be nimble.” While the move away from the diversified model has been unfolding for years, the “end game” emerged in January 2011 when Sara Lee announced its board of directors had agreed to divide the company into two separate companies. Planned for early 2012 (later revised to completion by the end of June 2012), Sara Lee said each company would have leading consumer brands and strong growth prospects. The plan calls for Sara Lee to spin off its North American Retail and North American Foodservice businesses into a new public company that would retain the Sara Lee name. Its brands would include Sara Lee, Jimmy Dean, Ball Park, Hillshire Farm, Chef Pierre and State Fair. The new company would have reported approximately $4.1 billion in revenue in fiscal 2010. The second company, dubbed CoffeeCo on an interim basis, was set to include Sara Lee’s current International Beverage and Bakery businesses, as well as the North American beverage business. Its brands would include Douwe Egberts, Senseo, Pickwick, Maison du Cafe, L’OR, Cafe Pilao, Marcilla and Bimbo. The company would have annual sales of about $4.6 billion in revenue in fiscal 2010 using fiscal 2010 actual exchange rates. As the year went on, Sara Lee dropped the plans to retain the international baking business and have moved to sell it. In addition to the company split, Mr. Smits said Sara Lee has committed to return more than $3.5 billion to shareholders through a combination of buybacks and a one-off dividend. In his September presentation, Mr. Smits reviewed considerable progress Sara Lee has made over the past year toward its objectives. Progress included both divestitures and acquisitions. “We’ve announced the closings of our air care, our body care, our shoe care and our cleaning business divestitures,” he said. “And Marcel Smits with that, 98% of our household and body care divestitures are now largely completed. And we are very pleased to see that our brands have found new homes and promising futures with very well-respected consumer products companies. In November of last year, we announced the disposition of our fresh bakery business here in North America. We have sold that business through Grupo Bimbo, and we’re aiming to close that deal before the end of September.” He continued, “As we execute the spin, fiscal 2012 is really a year of transition. Our activities in fiscal 2012 are very much focused on providing solid foundations, so that the companies that we can create, or that we are creating, are going to outperform their peers in their respective markets.” CP F ast acts Sara Lee progressed in a plan to split into two separate publicly-traded companies. The company is returning more than $3.5 billion to shareholders either in a one-time dividend or through stock buybacks. The company made progress toward shedding the company’s home care, personal products and North American and international baking businesses. 114 \ October 2011 Milling & Baking News • Food Business News • Baking & Snack • Meat & Poultry Corporate Proﬁles

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Milling & Baking News Corporate Profiles - October 2011