Food company Sara Lee Inc. (NYSE: SLE) has announced a special dividend of $3/share once the company’s spin-off of its coffee & tea division is completed, now expected to occur in June. The new company will be headquartered in the Netherlands, which the company’s CEO says “allows management to be close to its key Western European markets and effectively manage its global portfolio.”
The company received a ruling from the US Internal Revenue Service to the following effect:
The Private Letter Ruling confirms that key requirements for tax-free treatment of the spin will be satisfied. Since the IRS does not rule on certain elements of the spin, the company expects to receive an opinion of counsel that those additional elements should be satisfied. … The domiciliation of the Coffee & Tea business in the Netherlands is expected to result in U.S. shareholders incurring U.S. tax on any gain attributable to their Coffee & Tea shares.
The total value of the spin-off is $4.55 billion, which existing shareholders will receive as shares in the new company.
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