Foodservice

Sara Lee Sells Foodservice DSD Coffee Business to Farmer Bros.

Part of effort to simplify business focus

DOWNERS GROVE, Ill. -- Sara Lee Corp. has announced a definitive agreement to sell its U.S. direct-store delivery (DSD) foodservice coffee business to Farmer Bros. Co. The $45-million sale is expected to close in the first quarter of calendar 2009.

"We are pleased to announce the sale of our foodservice DSD coffee business, which is consistent with our commitment to simplifying our business to focus on areas where we have a clear, sustainable point of difference and can leverage our scale," said CJ Fraleigh, chief operating officer, North America, for Sara Lee Corp. "We [image-nocss] remain committed to growing our Foodservice beverage business, with its leading liquid and roast and ground coffee positions, through our strong national sales force and distributor network."

As part of the transaction, the Superior Coffee, Cain's, Ireland, Justin Lloyd, McGarvey, Metropolitan, Prebica, Suntipt (U.S. only), Wechsler, Cafe Royal and Royal Kona brands will be sold to Farmer Bros., which will license these brands back to Sara Lee for a transition period. In addition, Farmer Bros. will acquire more than 20,000 additional customers and Sara Lee's foodservice DSD coffee business sales and distribution staff and infrastructure, which includes more than 60 branch facilities and a fleet of vehicles, a major coffee manufacturing plant in Houston and a distribution and spice facility in Oklahoma City. Finally, for the next three years Farmer Bros. and Sara Lee have entered into reciprocal co-pack arrangements for the supply of certain coffee and tea products.

This action originally was referenced in a Form 8-K filed by the company on July 22, 2008, where Sara Lee concluded that certain assets in its foodservice segment should be classified as held-for-disposal. Sara Lee also recorded a noncash pretax impairment charge of $49 million, as disclosed in the company's annual report filed with the Securities & Exchange Commission (SEC) in Form 10-K on Aug. 27, 2008.

Downers Grove, Ill.-based Sara Lee offers a portfolio with food, beverage, household and body care brands including Ambi Pur, Ball Park, Douwe Egberts, Hillshire Farm, Jimmy Dean, Kiwi, Sanex, Sara Lee and Senseo. Collectively, these brands generate more than $13 billion in annual net sales covering approximately 200 countries.

Farmer Bros. is a manufacturer and distributor of coffee, tea and spices to the institutional foodservice segment in the United States. The company's product line includes approximately 400 items, including roasted coffee; coffee related products such as coffee filters, sugar and creamers; assorted teas; cocoa; spices; and soup and beverage bases. It primarily serves restaurants, hotels and hospitals, as well as retailers such as convenience stores, coffee houses, general merchandisers and grocery stores.

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