Sara Lee Sells Most Of North American Foodservic​e Coffee Ops ToSmucker For $350M 24/10/2011

Sara Lee Sells Most Of North American Foodservice Coffee Ops ToSmucker For $350M  Mia Lamar and Annie Gasparro   Dow Jones Sara Lee to discontinue Senseo coffee business in North America in March2012 Sara Lee and Smucker also strike licensing agreement to develop liquidcoffee technologies Shares of Sara Lee recently trading flat at $17.77, up 1.5% this year   Sara Lee Corp. (SLE) has sold the majority of its NorthAmerican foodservice coffee and tea operations to J.M. Smucker Co. (SJM) for$350 million in cash.   The move underscores Sara Lee's continuing efforts to slim down the packagedfoods company, while it is in the process of splitting apart, into aninternational coffee and tea business and a North American business thatincludes the Jimmy Dean and Hillshire Farms brands.   Sara Lee has been selling off non-core businesses in order to narrow itsfocus for the past few years. "This falls in line with those efforts,"Morningstar analyst Erin Lash said. "It's one more aspect that they're tryingto trim before the split."   Shares of Sara Lee recently traded flat from Friday's close at $17.77. Thestock is up 1.5% this year.   "Our decision to sell a major part of this business to Smucker is an exampleof Sara Lee Coffee and Tea's renewed focus on sustainable, profitable growthand part of our mandate to create the strongest possible pure-play company,"said Executive Chairman Jan Bennink. The deal is expected to close in thebeginning of next year.   Also Monday, Sara Lee said that its Senseo coffee business in North Americawill be discontinued as of March 31, 2012, with the exception of select onlinechannels. Sara Lee plans to sell or close the remaining assets of the NorthAmerican coffee business.   Sara Lee's exit from Senseo marks a departure from the single-serve coffeebrewer industry, which has been growing rapidly in the U.S. with Green MountainCoffee Roasters Inc. (GMCR) Keurig machines.   Smucker was already the largest U.S. roaster, but the deal with Sara Leecould give them some pricing clout, a commercial coffee trader said. The dealisn't expected to affect overall coffee prices since it doesn't imply newbrands or a greater purchase of coffee beans.   Sarah Lee's North American foodservice beverage business currently employsabout 690 people and generated net sales of approximately $530 million infiscal 2011, of which around $285 million was associated with the assets soldto Smucker. The companies anticipate about 450 people will transfer to Smuckerfollowing finalization of the agreement.   In addition to the sale, Sara Lee and Smucker have struck a licensingagreement to together develop liquid coffee technologies. As a result of theagreement, Sara Lee said it will receive a 10-year income stream of about $50million, plus growth-related royalties, which will help cover its research anddevelopment and other support expenses.   Smucker's coffee business, which features brands like Folgers, is its largestby sales. In a statement, Smucker Chief Executive Richard Smucker said theagreement would further strengthen the company's position in the North Americancoffee market.   "The addition of liquid coffee concentrate to the Smucker portfolio alignswith our desire to compete in all forms of coffee, adding to our roast andground, single serve, instant, and ready-to-drink platforms," Smucker said.   Like many other food makers, Sara Lee has lately faced a number of economicheadwinds, including shaky consumer mood and rising commodity costs. Fiscalfourth-quarter earnings slid 41%, though core earnings came in line withanalyst expectations, amid continued cost pressure on its bottom line.