Sara Lee Names New Coffee, Tea Biz (SLE) (UL)

Zacks

Sara Lee Corporation (SLE) recently announced that it will name its international Coffee and Tea business, scheduled to be split off by June this year, D.E Master Blenders 1753. The chosen name is based on the history of its popular coffee brand, Douwe Egberts.

Sara Lee plans to split the company into two publicly traded companies: an international coffee and tea business and a North American retail, foodservice and specialty meats business. Post spin-off, the international Coffee and Tea business will be domiciled in the Netherlands and will move its headquarters to Amsterdam in the second half of 2012. Its operations will be spread across Europe, Brazil, Australia and Thailand and will include popular tea and coffee brands such as Douwe Egberts, Senseo, L’OR EspressO, Marcilla, Pilão, Moccona, Pickwick and Hornimans.

The spin-off is part of Sara Lee’s plan to trim its portfolio in order to provide the best foundation for a strong and focused business. Sara Lee has been shedding its redundant units one by one to focus on its most profitable food and beverage businesses.

Sara Lee also recently announced the appointment of Harm-Jan Van Pelt and Eugenio Minvielle as the chief operating officers of the Rest of the World and Developed Markets segments, respectively, of the international coffee and tea business. Van Pelt will be responsible for operations in Eastern Europe, Australasia and Latin America whereas Minvielle will primarily concentrate on Western Europe. While Van Pelt has been with Sara Lee since 1998, Minvielle joins after serving as a chief executive officer of the North American operations of Unilever (UL).

Our Recommendation

We currently have a Neutral recommendation on Sara Lee Corporation. The stock carries a Zacks #2 Rank (short-term ‘Buy’ rating).

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