So long, Sara Lee

Sara Lee spins off coffee and tea business, and moves out of S&P 500.

By Minyanville Jun 22, 2012 3:25PM
After less than a year of self-divestiture and reorganization, Sara Lee (SLE) has shrunk core operations to the point where it will be replaced by Monster Beverage (MNST) in the S&P 500 (SPX) index on June 28.

This process started last October, when Sara Lee merged its refrigerated-dough business with Ralcorp Holdings (RAH) followed by a separate move in November regarding its Fresh Bakery business. In January, JM Smucker (SJM) took on Sara Lee's North American coffee and hot beverage business.

These moves did nothing to dilute the value of Sara Lee as a whole in the market's eyes. In February, Sara Lee shares were moved to "outperform" from "market perform" by Sanford Bernstein, which also took its price target up to $24, noting the improved profitability of the company's remaining international coffee business. 

Whether or not that analyst note had the company looking at itself in a different light, or the move was already planned, in June Sara Lee said it would spin off its international coffee and tea business, dubbed CoffeeCo. This move separated beverages from the meats, bakery and household items. Given how dramatically the company shrank, it was little surprise that the board approved a 1-for-5 reverse stock split.

Shareholders can expect CoffeeCo to pay a $3 per share special dividend...right before it merges again with a subsidiary of DE Master Blenders 1753.

What's left of Sara Lee will be called Hillshire Brands (HSH*) and will move into the S&P MidCap 400.

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20Comments
Jun 22, 2012 4:53PM
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How can a CEO be termed successful if their company is going out of business? Stock prices do not always show how well a company is going. Enron had a rising stock price when they found out it was a house of cards. This company change from using top flight goods to cheap substitutes cut the size of their products and raised prices ang got beat out of the top spot in that industry. One day we will get smart and stop paying CEO's with stocks cause thats all they think about when they run the company paying them that way. How to make it look good so the stock price runs up.

Jun 23, 2012 11:22PM
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What! Somebody doesn't like Sara Lee?...
Jun 22, 2012 4:22PM
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Sears won't be too much further behind Sara Lee. Soon enough it'll be gone.
Jun 22, 2012 7:21PM
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It ok ! Our president think that Queers marriage is more important. So  Less jobs in our economy, is going to be ok for him
Jun 23, 2012 11:14PM
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Just proves you can't have your cake and eat it, too!
Jun 22, 2012 5:54PM
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every co. in united states will ran out of money SOON. and than will come the gov. and take your 401k to pay for their

mistakes. we'll be just another country like the europe nations going under.  You mite think that's not possible but they will force you to buy gov. bonds that are worthless with your 401k. to pay for their expenses.

Obama  just keeps printing money and thinks that's the answer to our problems. it just makes it worse.

Hey obama, why don't you cut the gov. in half. Fire half of them, than cut all those un-needed burdens like no money

for military, no obama care period, no NASA, no unions of any kind, and reduce your gov. to almost no pay at all just like the rest of us. Than our country will start to breath a little easier you dumb ****.

What is going to take to get this country moving in the right direction? Certainly not obama the socialist.

 

scotty beam me up i can't take it here no more.

Jun 24, 2012 1:10AM
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Sara Lee is going away?  But, but, what about the iconic Sara Lee Pound Cake?  What about all the businesses Sara Lee bought back when they were feeling giddy and then later destroyed?  I don't care about Sara Lee as much as I want to see "Earth Grains 100% Whole Wheat Bread" return to the store shelves like it was before it was ruined by Sara Lee.  It was my favorite bread in the whole world, and Sara Lee killed it.  Good riddance to you, Sara Lee, good riddance.  May you rot.
Jun 24, 2012 11:23AM
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I think most consumers don't know what drives retail shelf stock and deli items like these. There is tremendous payola and back pocket stuff that determines who goes where and what displays will dominate how much space. Even the drivers are motivated to undercut the competition. What we people aren't noticing is a consolidation of diversity and continued cannibalism by giant brands of little to no distinction.
The only good thing that might come of this is if some country or area where butchers bakers and genuine clothing makers suddenly have the urge or need to relocate to where we are, or... we get a clue and practice the "art" of great food.

Jun 24, 2012 12:24AM
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This shows you can over diversify a business.  It is better to be the best at one thing, than lighting for third place in a dozen segments.

Thats why P&G sold off its Peanut Butter and Pringles businesses.
Why RJR split off Nabisco
Mega Conglomerates confuse the market and rarely do they have all their businesses firing on all cylinders.  Some segments are always offsetting the strong ones.

Segments should be synergistic.
Jun 22, 2012 7:04PM
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habib007,

As a comedy writer, you're right up there. Keep those laughs coming.

Jun 24, 2012 2:36PM
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AAAWWW ! I thought Sara Lee bread was ON THE RISE ! LMAO ! It really is good bread though...
Jun 22, 2012 4:43PM
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siamesmom1, $5  says RIM is gone before either one. sears or sara lee.
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