Sara Lee to Sell Units in Revamp

Sara Lee (SLE Quote) announced on Tuesday a restructuring plan that will include the sale of holdings such as Coach, PYA/Monarch and Champion as the company focuses on developing branded consumer packaged goods in the food and beverage, intimate apparel and household products sectors.

Sara Lee said its divestiture plans include initial public offerings and subsequent sale of leather goods maker Coach, PYA/Monarch, the nation's fourth-largest full-service food distributor, athletic apparel manufacturer Champion as well as the International Fabrics division of Courtaulds.

"We have a new vision for Sara Lee, a vision that will focus our business portfolio and resources on a smaller number of more powerful global growth platforms," C. Steve McMillan, Sara Lee's president and chief operating officer, said in a statement.

"What we have begun today allows us to preserve the benefits of diversification while improving the consistency and sustainability of our company's growth prospects and performance over the long term," McMillan added.

Shares of the Chicago-based company, which counts Sara Lee, Douwe Egberts, Hillshire Farms, Hanes and Playtex among its leading brands, were inactive in pre-market trading, according to Instinet. They closed at 18 9/16 on Friday. (Sara Lee closed Tuesday regular trading up 5/16, or 2%, at 18 7/8.)

Saying it was looking to expand its global reach, Sara Lee also announced acquisitions and investments in Uniao, Brazil's largest coffee company, Sol y Oro, Argentina's leading intimate apparel and men's underware company, and a minority investment in Johnsonville Sausage Co.

Sara Lee said it expected to issue shares of Coach and PYA/Monarch before the end of the year. Following the offerings, Sara Lee will own at least 80.1% of each company, which it will sell within 18 months. The company said it would separately negotiate the sale of Champion and International Fabrics.

The net impact of the various transactions is expected to be "modestly" accretive in fiscal 2001.

Like other multinationals, Sara Lee warned that the euro's weakness against the dollar could, however, weigh on earnings. If currency rates remain at current levels, the company said it expects per-share earnings to growth in the mid-single-digit range for fiscal 2001.

Wall Street expects Sara Lee to post earnings of $1.34 a share and $1.47 a share in fiscal years 2000 and 2001, respectively, according to a survey conducted by First Call/Thomson Financial.

The euro, which began life at an exchange rate of about $1.17 to the dollar in January 1999, has slid fairly steadily since. In European trading on Tuesday, it climbed to a five-week high above 93.42 cents, up nearly a cent on the day.