Under the plan approved by its board, Sara Lee’s North American Retail and North American Foodservice businesses (excluding the North American 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.
Each company is projected to have an investment grade credit profile, a competitive dividend yield, a corporate tax rate of approximately 35% and future financial flexibility with a targeted gross leverage of 2.0x EBITDA.
In conjunction with the planned separation, the board of directors intends to declare a $3.00 per share special dividend on the company’s common stock, the majority of which will be funded with proceeds from the sale of the company’s North American Fresh Bakery business. The special dividend is expected to be declared and paid in fiscal 2012 and before completion of the spin-off of Sara Lee’s North American Retail and North American Foodservice businesses.
“Today’s announcement is a logical step following the divestment of our International Household and Body Care business and the announced sale of our North American Fresh Bakery business,” said James Crown, Sara Lee Corp.’s chairman of the board. “We have carefully considered various strategic alternatives, including unsolicited indications of interest in the company. We believe that the spin-off, plus the one-time special dividend, offers the greatest potential for delivering long-term shareholder value. These two pure-play companies will have their own distinct growth strategies within their respective core markets that will attract a more focused shareholder base.”
Crown added, “On behalf of the board of directors, I would like to thank the management team and our employees worldwide for their tremendous support of our business and helping shape the long-term strategic plans for Sara Lee.”
In February 2010, Sara Lee Corp. announced a revised capital plan with intent to repurchase between $2.5 and $3.0 billion of stock. The company repurchased $500 million of shares in fiscal year 2010, $765 million of shares to date in fiscal 2011 and intends to repurchase an additional $535 million of stock in the remainder of this fiscal year, for a cumulative total of $1.8 billion through the end of fiscal 2011. After payment of the $3.00 special dividend in fiscal 2012, the company will have returned a total of $3.5 billion of capital to its shareholders since the revised capital plan was announced, and, at this time, does not expect to continue with further share repurchases through the completion of the spin-off. The company expects to maintain its quarterly dividend through the completion of the separation process.
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. Sara Lee will consult with relevant works councils during the process. The separation plan will also be 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.
The board of directors also announced that, effective immediately, it has appointed Jan Bennink, 54, as director and executive chairman. Bennink’s primary responsibility is the leadership and implementation of the spin-off, in addition to chairing the board of directors and building and maintaining a senior management team. Bennink replaces Jim Crown, who has served as chairman of the board since May 2010. Crown will continue on the board and will serve as lead independent director.
Bennink has extensive executive leadership experience in the food and beverage and consumer packaged goods industries. Most recently, he served as chief executive officer of Royal Numico and has also held key management positions with Groupe Danone, Benckiser Gmbh and Procter & Gamble. He previously served on the advisory board of ABN AMRO, as well as on the boards of various global companies, including Kraft Foods. He is currently a director of Coca-Cola Enterprises.
“Sara Lee has a powerful mix of iconic brands, people and potential,” said Bennink. “I am excited to serve as executive chairman of the board of directors and oversee the company’s transition into two publicly traded companies, each with exciting prospects for growth and value creation.”
Also effective immediately, Sara Lee has appointed Marcel Smits, 49, as chief executive officer. Smits has been serving as the company’s interim CEO since May 2010. In his role as chief executive officer, Smits will be responsible for Sara Lee’s day-to-day operations and execution of the company’s annual operating plan and strategy.
In addition to Bennink and Smits, the board of directors has named Mark Garvey, 46, as chief financial officer. Garvey has been serving as interim chief financial officer since May 2010. The Board has also determined that C.J. Fraleigh, 47, 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.
“We are pleased to have Jan Bennink join a senior management team that has performed so well, particularly since we formed the Office of the Chairman in 2010,” added Crown.
“He brings strong food and beverage experience, a global perspective and a solid track record of creating shareholder value. The board of directors is confident that with this leadership team in place, this company will build on its past successes as it completes its strategic plan.”
Sara Lee Corp.
Case Foods names president/COOCase Foods Inc., a leading poultry company, and its Case Farms affiliated companies are proud to announce the appointment of David Van Hoose to the position of president and chief operating officer. Van Hoose served as president and COO at Case Foods from 2003 to 2008 and succeeds Bill Lovette, who resigned from the company in December 2010.
“David was a strong leader during his previous tenure with Case Foods, and we are excited to have him back at the helm,” said Thomas R. Shelton, Case Foods founder, chairman and chief executive officer. “We thank Bill for his leadership as well and wish him the best in the future.”
With more than 45 years in the poultry industry, David Van Hoose brings a wealth of management experience to Case Foods. Prior to joining Case Foods, he spent more than 14 years with Pilgrims Pride Corporation serving as president, chief executive officer and chief operating officer. Van Hoose also served as president of Pilgrims Pride Mexican operations and senior vice president over poultry processing. Van Hoose has served on the Case Foods’ board of directors since his election in 2003.
Source: Case Foods Inc.
St. Louis meat market destroyed in fireWenneman’s Meat Market, located in the Metro East town of St. Libory, Mo., was gutted in a fire that occurred early Thursday morning. The cause of the fire is unclear, but the St. Libory fire chief said it was not considered suspicious, reports theSt. Louis Post-Dispatch.
Wenneman’s Meat Market is owned by Paul Otten, who is a volunteer firefighter and received a page at 2:50 in the morning with the name and address of his company.
"I ran for the door," Otten said. "It is a nightmare I hope I wake up from soon."
Otten said that the fire was most likely electrical in nature and looked to have started in a refrigeration unit that cools the freezers. The business, which dates back to 1927, has been a favorite for area hunters, he added.
"It's pretty much a total loss," Otten said. "The only thing left standing is the walls."
Otten was meeting with insurance agents at the site and said he plans to rebuild.
Source: St. Louis Post-Dispatch
U.S. cattle herd may be down to 1958 levelsThe U.S. cattle herd has shrunk to approximately 92.211 million head of cattle as of January 1, which is down 1.6 percent from a year ago and is the smallest size since 1958. The U.S. government releases its semiannual report on the cattle herd this afternoon, reports Bloomberg News.
“Cattle producers are being squeezed by tough finances and a soft economy,” said livestock economist Ron Plain said. “The supply is just shrinking. Beef prices are likely to be record high in 2011, and it should be a record that will last.”
Cattle ranchers in the southern Plains made an estimated $52 per cow last year, following losses of about $32 in 2009, said Jim Robb, the director of the Livestock Marketing Information Center, a researcher funded by the industry and government. Producers aren’t ready to expand because most of the profit wasn’t made until the fourth quarter, he said.
“It’s a multiyear process,” Robb said. “Just one year’s return in the cattle business does not necessarily lay the foundation to increase the number of breeding animals.”
He added that the increase in corn prices will also hinder any expansion.
Higher beef costs to lead to prince increase at Wendy'sWendy's/Arby's Group Inc. said higher prices for fresh beef will contribute to a 2 percent to 3 percent increase in commodity costs at its Wendy's hamburger chain this year.
"Beef remains our largest risk," Chief Financial Officer Stephen Hare said on a webcast from the company's investor day on Thursday, Reuters reports. The company is expecting an increase in beef prices of 10 to 15 percent. Some of that increase may be offset by an expected decrease in chicken prices, Hare said. Menu price increases will also help cover the higher costs.
Wendy’s management said that they are planning to step up expansion, both domestically and internationally. The company also plans to boost sales with extended hours, restaurant renovations and new menu items.
Wendy's will introduce a new line of high-margin premium cheeseburgers across the United States in the second half of this year and offer breakfast in 1,000 restaurants by the end of 2011.