Stock Spinoffs - Sara Lee Retires To Hillshire Farm, Gives Up Coffee

Twenty seven years after Consolidated Foods became Sara Lee, Sara Lee is retiring as a corporate name. Months of preparation culminated in a flurry of activity today, in which Sara Lee shareholders received a goodie bag containing 1 share of D.E. Master Blenders 1753(DEMBF), an international coffee company trading in Amsterdam, a $3 special cash dividend, and 0.2 shares of the new Hillshire Brands(HSH).

Though the company continues to sell frozen Sara Lee baked products, the name change reflects that the one-time conglomerate, which had made everything from shoe polish, to leather hand bags, to underwear, is now primarily a producer of meat.

D.E. Master Blenders has been thought to be a possible takeover target amidst intense competition in the coffee sector. In addition, its international listing may create pressure on the price as domestic funds sell, and may constrict float by making it more difficult for American individual investors to sell their stakes.

Through 3 rounds of spinoffs, over nearly two decades of underperformance, Sara Lee’s problems were blamed on lack of focus. Hopefully, the new focus of Hillshire Brands will allow the company to perform more like Coach(COH) than Hanes Brands(HBI).

Disclosure: The author owns shares in HSH, HBI, and DEMBF