Sara Lee Corp.’s talks to sell itself to Brazilian meat processor JBS SA have hit a snag over price, according to two people with direct knowledge of the situation.
Sara Lee, the maker of Jimmy Dean foods and Ball Park hot dogs, recently rejected a takeover offer from JBS, deeming the price too low, said the people, who declined to be identified because the talks are private. The bid was less than Sara Lee’s intraday high of $17.62 on Dec. 17, when the Wall Street Journal reported the companies were in talks, the people said. The stock closed at $17.26 that day, valuing Sara Lee at $11 billion.
The board of Sara Lee, which is considering other options for the Downers Grove, Ill.-based company, hasn’t given JBS a specific price at which it would sell, the people said. JBS, the world’s largest meat-processing company, has been in talks with Sara Lee about a deal for several months, and many key details have been worked out, the people said.
Spokesmen for Sara Lee and JBS declined to comment.
Sara Lee, whose sales surpassed $10 billion last year, has decided to sell other divisions, such as the North American bakery unit, to concentrate on its faster- growing coffee and meats businesses. The company has been led by interim chief executive officer Marcel Smits since Brenda Barnes resigned four months ago to focus on her health.
“At this point, we see Sara Lee at a crossroads,” Alexia Howard, an analyst at Sanford C. Bernstein, said in a Dec. 14 note to clients. The sale of the bakery unit and other businesses “could pave the way for a broader breakup scenario or takeover over the coming year.”
No deal is imminent and it is unclear whether a sale will be completed, said the people.
Sara Lee’s board is also analyzing whether it should spin off either its remaining meats or coffee divisions, a decision that would be driven by the tax implications of these transactions, said the people familiar with the matter. The board has moved slowly on naming a new CEO as it assesses its options, the people said.
Sara Lee also attracted interest from buyout firms including Apollo Global Management LLC and KKR & Co. earlier this year, people with knowledge of the matter said in October. Those approaches were rejected, the people said.
JBS is being advised by JPMorgan Chase & Co. Bank of America Corp. is advising Sara Lee.
