Sara Lee negotiates European meats sale
has entered discussions with Smithfield to sell its European meats
arm, following a drop in the division's anticipated selling price.
Sara Lee, maker of bread, cakes and Douwe Egberts coffee, is negotiating with the world's largest pork processor Smithfield to sell the well-known European business which manufactures the Aoste, Cochonou and Nobre brands.
The meat arm enjoyed sales of $1.1bn (€860.8m) in 2005 and holds strong positions in France, Benelux and Portugal. But the anticipated selling price of the division fell in April, as several non-binding bids forced the figure down.
The firm is now consulting with Smithfield's employee representatives, with a decision expected later this month.
The sale represents the latest management move to reduce the Sara Lee portfolio. Last year the company offloaded its European clothing business and the US retail coffee arm.
The divestures form part of a company overhaul announced in February that will see Sara Lee axe businesses accounting for a total of 40 per cent of earnings.
"The intended sale of the European meats business is the latest example of simplifying our portfolio as we transform Sara Lee into a world-class, integrated operating company," said Sara Lee chairman Brenda Barnes.
"Regardless of whether we sell this business, we remain confident in our ability to generate in excess of $3bn in after-tax proceeds from divesting non-core businesses, including the planned spin-off of our branded apparel, and Americas/Asia business later this year," added Barnes.
Throughout the 1980s and 1990s the firm diversified widely, resulting in a business portfolio that strayed a long way from its core cake-making activity. As well as clothes, coffee, cosmetics, toiletries, shoe polish and air freshener, Sara Lee's expansion resulted in operations that many industry experts said provided no or very little room for all-important synergies.
American firm Smithfield employs 51,000 people worldwide and has extensive hog production and pork processing operations across Europe. It operates in Romania, Britain, France, Poland and Spain, and has joint ventures in China and Mexico. The company's international sales last year topped $1bn.
