Food maker Sara Lee Corporation is to sell the majority of its North American foodservice coffee and tea operations to J.M. Smucker for $350 million.
Sara Lee’s North American foodservice beverage business currently employs approximately 690 people and generated net sales of approximately $530 million in the fiscal year 2011. Approximately $285 million of this was associated with the assets sold to J.M. Smucker.
Following the execution of the agreement, approximately 450 people will transfer to J.M. Smucker, Sara Lee said.
The two companies will also establish a long-term partnership to collaborate on liquid coffee innovation.
As a result of the licensing and support agreement, Sara Lee will receive a 10-year income stream totaling approximately $50 million, plus growth-related royalties, which will help cover its research and development and other support expenses.
Commenting on the deal, Sara Lee chairman Jan Bennink said: “In recent years, our North American coffee business has been foodservice-based and largely unbranded, which is a challenge in a highly competitive marketplace. 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.”
Richard Smucker, CEO of J.M. Smucker, added: “This transaction further strengthens our position as a leading North American coffee company. 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 foodservice market.”
The transaction is expected to close near the start of 2012.
Sara Lee’s food and beverage brands include Ball Park, Douwe Egberts, Hillshire Farm, Jimmy Dean, Sara Lee and Senseo. Collectively, the company’s brands generate nearly $9 billion in annual net sales.
Based in Downers Grove, Illinois, Sara Lee employs approximately 20,000 employees worldwide.
