Private equity firms blocked from Sara Lee sale

The Blackstone Group and Kohlberg Kravis Roberts – both based in New York – are being blocked from the bidding process by the Sara Lee corporation, according to a report in the New York Times.

The sale is being managed by investment bank Goldman Sachs, which is in turn carrying out the request by Sara Lee to block the two private equity firms from the bidding.

Sara Lee does not want to split the business​

Both investment banks have expressed an interest in buying the business, but Sara Lee has expressly said that it does want to split the dicision and that potential suitors should not have to partner with private equity firms.

The Sara Lee division is hoping to secure a sale for around $3bn and has so far attracted big personal care and household product players including Colgate-Palmolive, Clorox and SC Johnson.

Sara Lee confirmed that is was selling the division at the end of March, stating at the time that it has already received ‘expressions of interest’ in the business.

Sale should attract top bidders​

The $2.3bn business employs 8,000 people and produces major personal care brands such as Sanex, Radox and Brylcreem as well as household air freshener Ambi Pur.

Selling off the Netherlands-based household and body care segment will trim down the size of Sara Lee, which has already slimmed significantly over the past decade.

Following several major divestments, including the sale of its direct sales cosmetics business to Tupperware in 2005, Sara Lee’s annual turnover has fallen from $19.7bn in 1997 to $13.2bn in the fiscal year 2008.

Concentrating on food​

If Sara Lee now decides to sell its entire household and body care business, the company would be reduced to a food and beverage operation.

Investors have been positive about the possibility of a smaller and tighter Sara Lee although one analyst interviewed by the Chicago Tribune questioned the timing.

“The business is very economically sensitive and at this point selling it is not a good idea,”​ said Robert Moskow, a stock analyst at Credit Suisse.