Sara Lee May Split Meat, Coffee Units


NEW YORK (TheStreet) -- Sara Lee (SLE) plans to follow through with a plan to split its meats and coffee businesses into two separate companies, according to a report.

The Wall Street Journal reports that Sara Lee is convinced that this action would make it easier for a potential buyer to make bids for the businesses independent of each other. Sara Lee's coffee business is considered to be one of its strongest assets.
Sara Lee

The Wall Street Journal says that so far the only potential buyer that has approached the troubled company is Brazilian beef processor JBS SA. Last month, Sara Lee rejected a buyout offer from the company.

Sara Lee has been selling its businesses in order to sharpen its focus on core meats and beverage businesses, as it seeks to revive itself. News of the plan emerges after CEO Brenda Barnes, credited for her diligence in trying to improve the company's growth prospects, stepped down for health reasons.

"The lack of a CEO at present suggests this company will continue moving forward with dispositions or perhaps an outright sale," Stifel Nicolaus analyst Christopher Growe said in an analyst report.

Growe says that a breakup of the company into two separate pieces or an outright sale of the business seems to present the most lucrative option for shareholders.

Morningstar analyst Erin Swanson tells investors that Sara Lee's beverage-related business could garner potential interest from Nestle ( NSRGY) and the meat business would generate potential interest from JBS or Tyson ( TSN).

Shares of Sara Lee have inched 0.3% lower to $17.41 in premarket trading. Tyson Foods is unchanged at $16.56.
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-- Written by Andrea Tse in New York.

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