Sara Lee: to sell some coffee operations to Smucker

Downers Grove / IL. (slc) Sara Lee Corporation announced the sale of a majority of its North American foodservice coffee and tea operations to the J. M. Smucker Company for 350 million USD. The transaction is expected to close near the beginning of calendar year 2012. The two companies will also establish a long-term partnership to collaborate on liquid coffee innovation.

«In recent years, our North American coffee business has been food-service-based and largely unbranded, which is a challenge in a highly competitive marketplace», said Jan Bennink, executive chairman of Sara Lee´s board. «Our decision to sell a major part of this business to Smucker is an example of Sara Lee Coffee and Tea´s renewed focus on sustainable, profitable growth and part of our mandate to create the strongest possible pure-play company. Smucker, which owns leading U.S. coffee brand Folgers®, and Sara Lee have also entered into a licensing agreement to cooperatively develop liquid coffee technologies to drive long-term growth. We look forward to working with Smucker and to the promising future of our new pure-play coffee and tea company».

As a result of the licensing and support agreement, Sara Lee will receive a ten-year income stream totalling approximately 50 million USD, plus growth-related royalties, which will help cover its research and development and other support expenses.

«This transaction further strengthens our position as a leading North American coffee company», said Smucker´s CEO Richard Smucker. «The addition of liquid coffee concentrate to the Smucker portfolio aligns with our desire to compete in all forms of coffee, adding to our roast and ground, single serve, instant, and ready-to-drink platforms. The innovation partnership further allows us to collaborate on new technologies in the liquid coffee category for the food-service market».

The North American food-service beverage business currently employs approximately 690 people. In fiscal 2011, the food-service beverage business generated net sales of approximately 530 million USD, of which approximately 285 million USD was associated with the assets sold to The J.M. Smucker Company. Following the execution of the agreement, approximately 450 people will transfer to The J.M. Smucker Company.

The company also announced that Senseo coffee in North America will be discontinued as of March 31, 2012, with the exception of select online channels. Sara Lee plans to sell or close the remaining assets of the North American coffee business, and expects to provide an update on the process before the end of calendar year 2011.