NEW YORK ( TheStreet) -- J.M Smucker (SJM - Get Report) agreed to buy the North American coffee and hot beverage divisions of Sara Lee (SLE) for $350 million and an additional $50 million over 10 years.
Smucker said Monday in a press release announcing the deal that the purchase of Sara Lee's coffee business includes the Douwe Egberts concentrated liquid coffee formula served up in diners nationwide as well as ground coffee, cappuccino and tea products. Smucker said buying Sara Lee's foods divisions will add 450 employees and $100 million in sales starting in 2012 and isn't expected to hurt earnings excluding a $25 million transaction cost.
The Sara Lee coffee and tea brands will be added to Smucker's distribution of Folgers, Dunkin Donuts, Café Bustelo, Carnation and Café Pilon brands. The 110-year-old company also sells fruit spreads, peanut butter, ice cream and Pillsbury bakery products.
Sara Lee stock rose nearly 34% to $18.30 a share in premarket trading.The sale by Sara Lee is a further push in its breakup strategy, which was announced in January. The company said it would split its household products and foods businesses from its coffee businesses into two publicly traded companies. -- Written by Antoine Gara in New York