Sara Lee will sell its North American refrigerated dough business to Ralcorp for $545 million, the company said Tuesday, as it moves closer to splitting itself into two separate entities.
Sara Lee Corp. has been selling off parts of itself for years and announced in January that it would split its remaining businesses in two by early 2012, with one company focused on coffee and the other largely focused on meat. The Downers Grove, Ill. company announced in May that it was shopping around its refrigerated dough business and its international bakery operations.
Sara Lee is not alone in deciding that it would be more profitable to go forward as a number of smaller companies, rather than a giant single producer.
Last week Kraft Food Inc. said it would split into two publicly traded companies, with one focusing on its international snack brands like Trident gum and Cadbury chocolates and the other on its North American grocery business that includes Maxwell House coffee and Oscar Mayer meats. And Ralcorp said in July that it plans to spin off cereal maker Post Foods _ whose cereals include Honey Bunches of Oats, Grape Nuts and Post Raisin Bran _ to focus on building its generic foods business. It acquired the company four years ago from Kraft for roughly $1.7 billion.
With the sell-off the refrigerated dough business to Ralcorp Frozen Bakery Products Inc., Sara Lee will shed a unit that makes private label toaster pastries, crescent rolls, pizza and pie crusts and basic and specialty biscuits that are packaged and sold to retailers. The division, with plants in Forest Park, Ga. And Carrolton, Texas, has about 700 employees.
The sale "will better enable our North American business to focus on its branded meats and frozen desserts products and establish a platform for a strong and independent future," CEO Marcel Smits said.
Sara Lee, in addition to its namesake brand, also makes Ball Park, Hillshire Farm and Senseo.
The sale of the refrigerated dough business is expected to close by the end of the year.
Separately, Ralcorp Holdings Inc. reported third-quarter adjusted earnings of $1.15 per share on revenue of $1.17 billion. Analysts surveyed by FactSet expected earnings of $1.20 per share on revenue of $1.16 billion.
Shares of Sara Lee rose 29 cents to $17.42 in morning trading, while Ralcorp's stock dropped $1.95, or 2.6 percent, to $72.34.