Sara Lee to sell North American refrigerated dough business to Ralcorp
Sara Lee, which plans to split into two by early next year with one company focused on internation coffee and tea, and the other focused on North American meats, said the sale would “better enable our North American business to focus on its branded meats and frozen desserts products”.
The refrigerated dough business, which makes private label toaster pastries, crescent rolls, biscuits and pizza and pie crusts for retailers, operates plants in Forest Park, Georgia, and Carrolton, Texas, and posted net sales of just over $300m in the year ended July 2010.
The acquisition would boost Ralcorp’s cash flow and generate annual synergies of $6-8m, said Ralcorp co-chief executive and president Kevin Hunt: “This transaction will allow Ralcorp to be a private-brand leader in the $1.8bn refrigerated dough category.
“Given the high quality of the business, the attractive financing markets and the tax attributes and synergy potential of the transaction, this acquisition represents the continuation of our strategy of enhancing shareholder value through private-brand acquisitions."
Deal to close in two to three months
Upon completion of the deal – which is expected in 60-90 days - the business will operate as part of the Ralcorp Frozen Bakery Products division.
Ralcorp, which specializes in private-label foods for retailers and frozen bakery products for in-store bakeries and the foodservice sector, recently announced plans to separate its Post branded cereals division from its lower-margin private label business.
The firm, which has been on the acquisition trail since it was spun off from Ralston Purina in the 1990s, posted a 22 percent rise in net sales to $1.17bn in the three months to June 30, primarily as a result of recent acquisitions.
Base-business net sales increased 5%, with an increase in overall net pricing offsetting an overall 2% volume decline at the firm, which has been courted by food giant ConAgra in recent weeks, but has so far rejected its overtures.
Net profits dropped from $53m to $28.3m.