Sara Lee to sell majority of coffee business to J M Smucker for $350 mn

Sara Lee Corp will sell the majority of its North American foodservice coffee business to The J M Smucker Co for $350 million in cash as the $9-billion consumer goods conglomerate continues to hive off non-core units prior to splitting into two companies.

The sale is the latest in a series of divestures for Sara Lee since 2006 that has seen the Illinois-based company sell of a wide range of businesses like Coach handbags, North American bakery business, global body care, European detergents business and North American private brand refrigerated dough business among others.

"In recent years, our North American coffee business has been food service-based and largely unbranded, which is a challenge in a highly competitive marketplace," said Jan Bennink, executive chairman of Sara Lee board.

The North American foodservice beverage business generated sales of approximately $530 million last year, of which approximately $285 million was associated with the assets sold to The J M Smucker.

The acquisition includes Sara Lee's liquid coffee concentrate business sold under the licensed Douwe Egberts brand, along with a variety of roast and ground coffee, cappuccino, tea, and cocoa products, sold through foodservice channels in North America.

In addition, the companies agreed to collaborate on liquid coffee technologies by entering into a long-term foodservice innovation partnership. Sara Lee will receive $50 million plus royalties over 10 years from the partnership.