Smucker to Buy Most of Sara Lee's North American Coffee Unit

Industrials Reuters

Sara Lee Corp (SLE) plans to sell the majority of its North American foodservice coffee business to J.M. Smucker Co (SJM) for $350 million as it continues to shed nonessential units ahead of its split into two companies.

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Sara Lee also said Monday that it would set up a licensing partnership with Smucker to develop new liquid coffees. Sara Lee will receive $50 million plus royalties over 10 years from the partnership.

Sara Lee is splitting itself into a North American meat company, with brands including Hillshire Farm and Jimmy Dean, and an international coffee and tea company encompassing such brands as Douwe Egberts and Pickwick.

It is also selling its North American fresh bakery business to Mexico's Grupo Bimbo.
Sara Lee also said it would discontinue its Senseo coffee brand in North America on March 31, except for certain online channels.

The North American foodservice coffee business, which sells to restaurants and institutions, has 690 employees and annual sales of about $530 million. Smucker, which makes Folgers coffee, will acquire assets that employ 450 workers and have sales of $285 million.

The companies expect the deal to close in early 2012.

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Sara Lee Executive Chairman Jan Bennink said it was a ''challenge'' to compete in the foodservice business, since it is largely unbranded.

Shares of Sara Lee were down 0.1 percent at $17.75 on the New York Stock Exchange, while Smucker was up 0.5 percent at $76.90.

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