Sara Lee Corp. (SLE, $19.40) is planning to split into two publicly traded companies during the first half of 2012 and also pay a special dividend of $3.00 per share prior to the stock spin-off. Don't get too excited about that $3.00, though, because share prices are adjusted downward when dividends are paid. The question here is: will one or both of the post-spin-off companies be fiscally healthy and competitive enough for the stock price(s) to subsequently rise?
The two post-spin-off stocks will represent Sara Lee's international coffee and tea business in one company, and North American operations in another company, which includes Jimmy Dean, Ball Park and Hillshire Farm meat products; baked goods, and the commercial food operations.
Big changes have been happening at Sara Lee. The Chairman and CEO suffered a health crisis in 2010 which forced her to step down from company leadership, and several new executives have taken on those and other leadership roles. Sara Lee has current plans to divest various North American and European coffee, bakery, and refrigerated dough businesses in 2012, and the company has recently divested the bulk of its Household & Body Care business. Standard & Poor's Research has a Qualitative Risk Assessment of "Medium" on Sara Lee. "Our risk assessment for Sara Lee reflects the relatively stable nature of the company's end markets, what we expect to be sizable cash flow from operating activities, and corporate governance practices that we view as favorable relative to peers, offset by prospective commodity cost pressure and changes related to a prospective special dividend and split-up of the company."