Global consumer goods firm Sara Lee Corp is selling its 51 per cent stake in joint venture with Indian company Godrej to Godrej Consumer Products Ltd for 185 million euros (about $234 million), as the US-based company focuses on growing its food and beverage businesses.
The 15-year-old Godrej Sara Lee joint venture primarily markets insecticides, including the leading brand of mosquito repellent Good Knight throughout India.
The transaction, which is subject to customary closing conditions, is expected to close before the end of Sara Lee's fiscal year on July 3, 2010.
"Having partnered with Godrej for 15 years, we are confident that their great team will build on the success we have shared to date and ensure that these leading brands will continue to thrive," Sara Lee's Chairman and CEO Brenda Barnes said in a statement here.
Barnes said the stake sale is the next step in Illinois-based Sara Lee's strategy to focus on its core food and beverage businesses.
Under this strategy, the company is selling off its international household and body care businesses.
In fiscal 2009, the Godrej Sara Lee joint venture generated annual sales of approximately 158 million dollars and accounted for about 9 per cent of the adjusted operating segment income for Sara Lee's International Household and Body Care business.
"The sale of our stake in the Godrej Sara Lee joint venture, combined with the previously announced binding offers with P&G and Unilever, underscore the significant value of our Household and Body Care portfolio," Barnes said.
As part of Sara Lee's divestiture plan for its household and body care business, it has received binding offers from Unilever for its Body Care business for 1.27 billion euros (1.61 billion dollars) and from P&G for its Air Care business for 320 million euros ($404.8 million)
In total, Household & Body Care transactions to date are expected to generate pretax sales proceeds of approximately 1.78 billion euros (2.3 billion dollars).
The company also continues to receive strong interest in the remainder of the business, which includes shoe care, non-Indian insecticides and certain non-European cleaning brands, Barnes said.
In February 2010, Sara Lee announced a revised capital plan that focuses on share repurchase, dividend pay-out and the funded status of the company’s pension plans.
The company plans to buy back $2.5 billion to $3 billion of shares over a three-year period, with approximately $1.0 billion to $1.3 billion of the shares anticipated to be repurchased in 2010.
"The company continues to evaluate the best opportunities for value creation and investment of cash, including potential acquisitions or other investments in the company's growth," Barnes added.
Godrej Consumer Products is a major player in the Indian FMCG market and is one of the largest marketers of toilet soaps in the country with brands such as Cinthol, Godrej Fairglow and Godrej No.1.
Sara Lee's portfolio comprises brands like Ambi Pure, Hillshire Farm, Kiwi and Senseo.
