As part of its move to focus on core brands and businesses, US consumer goods group Sara Lee Corporation has announced the sale of its European meats business to Smithfield Foods for US$614m.
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Sara Lee announced yesterday (27 June) that it had entered into a purchase agreement with Virginia-based Smithfield, the world’s largest pork producer. The companies said that $575m of the purchase price will be in cash with the remainder being made up from the assumption of $39m in pension and other liabilities.
“The sale of the European meats business supports our more focused business model, emphasising large, branded positions that provide a platform for strategic growth,” said Brenda C. Barnes, chairman and chief executive officer of Sara Lee. “As we continue to simplify our organisation, we are better positioned to drive long-term, sustainable growth for Sara Lee shareholders.”
The Sara Lee European meat business is headquartered in Hoofddorp, the Netherlands. Its principal markets are France, Benelux and Portugal where it sells popular brands such as Aoste, Justin Bridou, Cochonou and Nobre. The operation employs some 4,500 people and in 2005 generated sales of $1.1bn.
Smithfield said it intends to complete and finance the acquisition on a stand-alone, non-recourse basis through a 50%-owned joint venture with Oaktree Capital Management.
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By GlobalDataSmithfield will contribute its Jean Caby European processed meat operations, which had sales of $372m in fiscal 2006, to the joint venture. The new company will be headed up by Robert A. Sharpe II, currently president of Smithfield’s international operations.
“This acquisition is an important step,” Sharpe said. “Our strategy going forward will be to develop leading companies with strong brands directed by dynamic local management. The Sara Lee business is well positioned with broad distribution and strong brands.”
The transaction is subject to customary regulatory and closing conditions. It is expected to be completed by the end of September.
