Sara Lee shares soar on JBS buyout rumors

By Caroline Scott-Thomas

- Last updated on GMT

Related tags: Sara lee, Kohlberg kravis roberts

Sara Lee Corp. stock soared close to a 52-week high on Monday on reports that it had turned down a buyout offer from Brazilian beef giant JBS.

Sara Lee’s future was cast into doubt when CEO Brenda Barnes stepped down in August after suffering a stroke. It remains without a permanent CEO and has been led by interim chief executive Marcel Smits since then.

Citing unnamed sources, media reports have said that the companies have been in talks for several months and many key details of a potential deal have already been determined, but the firms have run into disagreement over price.

Reportedly, one concern is the similar market capitalization of the two companies, with Sara Lee valued at about $11bn according to its closing share price of $17.26 on Friday. The Sao Paulo-based firm is the world’s biggest meat exporter, and also the majority stakeholder in US poultry company Pilgrim’s Pride. It is valued at about $10.5bn.

However, Sara Lee and JBS have both refused to comment on speculation about a possible deal, and Sara Lee has also declined to comment on rumors that it turned down a buyout offer from private equity firm Kohlberg Kravis Roberts & Co (KKR) in October.

Sara Lee shares rose 43 cents to close at $17.69 on Monday, up 2.5 percent.

Sanford C. Bernstein analyst Alexia Howard wrote in a note to investors last week that she sees two possible outcomes for the company: it is likely either to focus on building its North American business, or agree to a buyout, whether outright or piecemeal.

“At this point, we see Sara Lee at a crossroads,”​ she wrote.

The company has been selling off business divisions, including its North American bakery business, which it said it would sell to Mexico-based Grupo Bimbo last month, in order to focus primarily on its core processed meat and coffee businesses.

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