Sara Lee to spin off coffee and tea business by June

US consumer goods company Sara Lee plans to spin off its international coffee and tea business to DE International by the end of June this year.

This move comes after Sara Lee’s announcement in January 2011 to divide the company into two publicly traded companies, one focused on the international coffee and tea business and the other one focused on North American meat brands.

DE International, who will subsequently list the coffee and tea business on the Amsterdam stock exchange, will also change its corporate name before the completion of the split and relocate its headquarters from Utrecht to Amsterdam by the second half of the year.

Sara Lee executive chairman Jan Bennink said that with over 250 years of history, the coffee and tea business, which includes brands such as Senseo and Pickwick Teas, has strong market positions and deep roots in many European markets.

"Domiciling Coffee & Tea in the Netherlands allows management to be close to its key Western European markets and effectively manage its global portfolio," Bennink added.

The coffee and tea business posted sales of €2.6bn in 2011, a growth from €2.3bn in 2010.

Sara Lee will not issue new shares, but each share will be split into two, one for the meat and the other for the coffee business.

The group plans to pay a $3 special dividend to shareholders, as part of the spin-off process.

Post separation, Sara Lee will have about $1.7bn in debt and approximately $300m in cash, and will completely concentrate on the meat business featuring brands such as Jimmy Dean sausage and Ball Park hot dogs.

 

Image: DE International will take over Sara Lee’s tea and coffee business from the end of June 2012. Photo: Sara Lee