After less than a year of self-divestiture and reorganization, Sara Lee Corp.'s
(SLE) latest move has shrunk core operations to the point where the S&P 500
(^GSPC) index will replace it after the close of trading on June 28 with Monster Beverage
This whole process started in October 2011 when Sara Lee merged its refrigerated dough business with Ralcorp Holdings
(RAH) followed by a separate move in November regarding its Fresh Bakery business. In January, JM Smucker Company
(SJM) took on Sara Lee's North American coffee and hot beverage business.
These moves did nothing to dilute the value of Sara Lee as a whole in the market's eyes. In February,
Sara Lee shares were moved to Outperform from Market Perform by Sanford Bernstein, which also took its price target up to $24, noting the improved profitability of the company's remaining international coffee business.
Whether or not that analyst note had the company looking at itself in a different light, or the move was already planned, in June Sara Lee said that it would spin off its international coffee and tea business, dubbed CoffeeCo. This move separated beverages from the meats, bakery, and household items. Given how dramatically the company shrank, it was little surprise that the board approved a 1-for-5 reverse stock split.
Shareholders can expect CoffeeCo to pay a $3 per share special dividend...right before it merges again with a subsidiary of DE Master Blenders 1753
What's left of Sara Lee will be called Hillshire Brands
(HSH-WI) and will move into the S&P MidCap 400.
No positions in stocks mentioned.