Sara Lee may split up
After rejecting 2 high-stakes bids, the company reportedly decides to pursue its own future by breaking itself up.
The company has been a hot prospect lately, receiving takeover bids from two teams. One investor group decided to drop the pursuit after seeing its $13 billion bid rejected, Reuters reported. The other team is having a hard time lining up more money.
Now it sounds like Sara Lee is going to go down its own road. Is this a legitimate decision, or is the company simply spinning this to juice up the bidding process? Perhaps a bit of both. Surely Sara Lee's board will entertain higher offers, but at the same time, it's exploring other strategies.
Investors pooh-poohed the latest news, sending Sara Lee shares down 5% to $17.60 in afternoon trading.
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A split-up is "not very satisfying to those folks," one portfolio manager told Reuters. Sara Lee is "in the throes of a lot of speculators right now, hoping that someone will come along and save it," he added.
Sara Lee owns a diverse product line, including Ball Park hot dogs and Jimmy Dean breakfast foods. But the company's beverage unit may be the most attractive to outside investors, one analyst told Bloomberg. Senseo is one of Sara Lee's coffee brands.
"You have good, stable brands and abundant cash flow," the analyst added. "It would scream pretty favorably from a private-equity perspective." A leveraged buyout of Sara Lee -- at least with the numbers being passed around -- would have been the largest the industry has seen in a decade, Bloomberg calculated.
One advantage to a spin-off is that it would be tax-free, Reuters reported. After the spin-off, buyers could just purchase the stock from shareholders.
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[BRIEFING.COM] The major averages remain near their flat lines as the final session of the week continues in quiet fashion. Interestingly, even though the key indices have spent the bulk of the trading day near their unchanged levels, the Treasury market has not behaved in the same fashion.
The 10-yr note currently trades at its lowest level of the session after a steady retreat. The benchmark 10-yr yield is now higher by seven basis points at 2.70%. It is worth mentioning that ... More
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