Sara Lee Corp. announced Friday that it would divide into two publicly traded companies — one focusing on its North American food businesses and the other on European coffee, tea and bread.
In a call with investors, Marcel Smits, the company's newly appointed chief executive, acknowledged that Sara Lee had received "unsolicited interest" from potential buyers. Instead of selling, the company's board determined that splitting Sara Lee was in shareholders' best interests.
Sara Lee will issue a $3 special dividend to shareholders as part of the split.
The decision caps months of speculation about the dissolution of Sara Lee, which once sold pantyhose, bug spray and undershirts as well as coffee, sausages and cheesecake. In recent months, the company has completed a handful of sales that leave it focused on North American packaged meat and European coffee.
Speculation that the company was on the brink of accepting a buyout offer has brought Sara Lee's stock to a series of consecutive 52-week highs since December. Reports that the company had turned away suitors began taking a toll on the stock Wednesday. On Friday, Sara Lee shares fell 47 cents to $17.17.
Smits was officially named CEO on Friday after serving as Sara Lee's interim CEO since May. He said that the company had conducted a rigorous review of the offers, that it was confident that splitting in two was the best option — and that the decision had support from Sara Lee's shareholders.
Under the plan, Sara Lee's North American retail business, which includes its sausage and cheesecake business as well as its North American food-service unit, will keep the Sara Lee name and have an estimated $4.1 billion in annual revenue.
The second company has not been named yet but is being referred to as "Coffee Co." It will consist of Sara Lee's international beverage business, which makes Senseo and Douwe Egberts coffees, and its international bakery business, which makes bread. The company will have an estimated $4.6 billion in annual revenue.
Smits said it had not yet been decided whether Coffee Co. would be based in the United States or in Europe.
The two companies "have great opportunities to prosper and deliver significant value to shareholders as separate entities," he said.