Sara Lee Expected To Separate Into Two Companies by 2012

The Sara Lee Corp. board of directors has agreed in principle to divide the company into two separate, publicly traded companies. The separation is expected to be completed in early calendar year 2012.

Under the plan, Sara Lee’s North American retail foodservice businesses (excluding the beverage business) will be spun off, tax-free, into a new public company that will retain the “Sara Lee” name.

Its leading brands will 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 yet to be named other company will consist of Sara Lee’s current International beverage and bakery businesses, as well as the North American beverage business. Its leading brands will include Douwe Egberts, Senseo, Pickwick, Maison du Café, L’OR, Café Pilão, Marcilla and Bimbo. This entity would have reported approximately $4.6 billion in revenue in fiscal 2010 using fiscal 2010 actual exchange rates.

The board of directors also announced that, effective immediately, it has appointed Jan Bennink as director and executive chairman, Marcel Smits as chief executive officer, Mark Garvey as chief financial officer. In addition, CJ Fraleigh, who currently serves as Sara Lee’s chief executive officer, North America, will be named chief executive officer of the new North American Retail and Foodservice business upon completion of the spin-off.

The company is developing detailed implementation plans for the spin-off and will continue to evaluate a variety of methods to enhance the efficiency of the operating structure of the two companies. The separation plan is also subject to final approval by the board of directors, other customary approvals and the receipt of an IRS tax ruling. Further details will be disclosed at a later date.