Sara Lee rumoured to be making moves to exit personal care
The company has engaged Goldman Sachs Group to scout for possible bidders, and is expected to pay in the region of $2bn for the business, according to reports in the Wall Street Journal.
Investors reacted positively to the sale rumours, pushing share prices to $7.96 at mid-morning trading today, up from $7.06 on Wednesday, March 11 - the day before the Wall Street Journal article was published.
Big names linked to possible bids
Possible buyers are said to include Unilever, Reckitt Benckiser, Johnson & Johnson and Colgate-Palmolive, while Beiersdorf is also currently on the acquisition trail.
Sara Lee has remained tight-lipped over the rumors, refusing to deny or acknowledge whether or not they are valid.
Analysts have been speculating over the future of the company’s largely European household and personal care division, particularly as it has been hard hit by the dual spectre of a strong US currency and lower consumer spend.
Company falls into the red
In February the company announced a second quarter loss of $17m, compared to a net income of $182m in the corresponding period last year.
CEO Brenda Barnes has acknowledged that weakness in its European business is likely to lead to a spate of new product innovations, increased distribution and store promotion to try and boost sales, combined with agressive cost reductions.
Indeed, the company is hoping to implement cost savings in the region of $200m - $250m throughout its operations by the end of fiscal year 2011.
Sanex and Brylcreem in the offing?
The company, which is currently divided into six business segments that includes household and body care, together with its international bakery division, has a number of major international brands, including Sanex body care, as well as its most global brand, Kiwi shoe polish.
Other brands in the body care division include Radox and Monosavon, together with the hairstyling product Brylcreem and shaving brand Williams.
Sara Lee has seen some challenging business conditions in the past few years. Financial difficulties in 2005 led the company to sell off its direct sales personal care business to Tupperware for $577m, in a move that left it with a hand full of leading personal care brands.
That move meant that Sara Lee is now a dedicated food and beverage company in North America, while its household and personal care operations remain concentrated in Europe.