The company will pay its regular $0.12 dividend but the split will also result in a $3.00 per share cash special dividend that should be completed early in 2012.
Sara Lee’s North American retail and food services will be spun off in a tax-free manner to shareholders into a new public company. That entity will keep the Sara Lee name and will consist of the Sara Lee desserts and will also have the Hillshire Farm sandwich meats brand along with Jimmy Dean sausages and its BallPark hot dogs. Those operations had roughly $4.1 billion in 2010 revenues.
The spin-co unit will include Sara Lee’s international bakery and beverage operations and will include the beverage business in North American with brands like Douwe Egberts, Senseo, Maison du Café, L’OR, Café Pilão, Marcilla, Bimbo, and Pickwick.
Sara Lee noted that each company should have an investment grade credit profile with a competitive dividend yield. It is anticipated that each will have a tax rate of roughly 35% and future financial flexibility with a targeted gross leverage of 2.0x EBITDA.
Shares of Sara Lee had traded as high as $20.26 before the sale process news went against it and shares closed yesterday at $17.64. The pre-market indication has shares indicated up 0.6% at $17.75 in the pre-market.
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