Sara Lee to sell refrigerated dough business to Ralcorp
The two companies said today (9 August) that Ralcorp would acquire the business for US$545m. It manufactures a range of private-label products including biscuits, crescent rolls, pizza and pie crusts and toaster pastries, which are sold to food and mass retailers.
Sara Lee announced in May this year that it was evaluating strategic options for the business, which employs around 700 people and generated revenue in excess of $300m in fiscal 2010.
“The sale of our North American Refrigerated Dough business to Ralcorp is another step forward for Sara Lee as we continue to prepare for our separation into two publicly-traded companies,” said Sara Lee CEO Marcel Smits. “It will better enable our North American business to focus on its branded meats and frozen desserts products and establish a platform for a strong and independent future.”
Ralcorp said it expects the acquisition to generate between $6m and $8m in annual operational synergies after the third-year after the deal closes.
“This transaction will allow Ralcorp to be a private-brand leader in the $1.8bn refrigerated dough category,” Ralcorp co-CEO and president Kevin Hunt said.
Hunt added that the deal would create “significant value” for Ralcorp’s shareholders. The value, Hunt said, would increase after Ralcorp spun off its Post Foods branded cereals division.
“The percentage impact of this accretion will be even more significant after the Post Foods separation, as our private-brand earnings base will be smaller. 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.”
Ralcorp announced last month that it planned to spin off Post. At the time, it said that it would aggressively look for acquisitions to boost its private-label business.