Sara Lee sells European apparel business | VailDaily.com
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Sara Lee sells European apparel business

CHICAGO – Sara Lee Corp. said Monday it is selling its European clothing unit to an affiliate of the Sun Capital Partners Inc. investment firm for more than $117 million, part of an ongoing overhaul at the food and apparel manufacturer.Sara Lee said it will be paid 100 million euros ($117.2 million) cash plus potential contingency payments based on future performance from the affiliate of Boca Raton, Fla.-based Sun Capital.The clothing unit consists of marketing rights for such Sara Lee-owned brands as Dim, Playtex, Wonderbra, Abanderado, Nur Die and Unno in France, Germany, Italy, Spain and the United Kingdom and throughout Eastern Europe. The brands generated almost $1.2 billion in sales in fiscal 2005.Sara Lee signaled its intent to get out of the apparel business when it launched a restructuring early this year to focus on its food, beverage, and household and body-care operations. It retains Playtex and Wonderbra as part of its U.S. apparel business, which spokeswoman Julie Ketay said it still intends to spin off between June and September 2006.Sara Lee said it would receive 49 percent of the first 204 million euros ($239.1 million) of cash distributed from the business after the closing of the transaction, which is expected in January, plus “a smaller percentage of cash distributions in excess of this amount,” Sara Lee said in a statement.The buyer will also take on about 70 million euros ($82 million) of pension and related liabilities outside the United Kingdom.Sara Lee also said it expects to contribute about 62 million euros ($72.7 million) to fund some pension obligations in the United Kingdom. It expects that the plan trustees will purchase annuities for plan participants, resulting in a material settlement loss.One analyst suggested Sara Lee could have gotten a better price for the unit.”Although the business had been declining, the price seems low for a sales base of $1.2 billion,” said Craig Hutson of the Gimme Credit independent research service in an investment note.Sara Lee Courtaulds, the British-based division that manufactures private-label clothing for retailers, is not part of the transaction announced Monday. Sara Lee said it will continue to explore options for that business, which recorded about $560 million in sales last year.Shares in Sara Lee fell 15 cents to $17.99 in afternoon trading on the New York Stock Exchange, down from a four-year high of $25 in January before the restructuring began.—On the Net:www.saralee.com


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