Source:  Rita Jane Gabbett, MEATINGPLACE.COM, 1/7/11

Sara Lee Corp. is proceeding with plans to separate its meats and coffee businesses, after it rejected JBS S.A.’s offer and no other bidders have emerged, the Wall Street Journal quoted people familiar with the matter as saying.

JBS could still come back with a higher offer for the entire company, but Wall Street analysts have suggested JBS might be in a better position to bid just for the meat business, given that Sara Lee’s market capitalization, at $11 billion, exceeds JBS’s $10 billion.

In a note to investors earlier this week, BMO Capital Markets analyst Kenneth Zaslow said the likelihood that JBS will acquire the entire company appears low because of Sara Lee’s relative size, the limitations of JBS’s capacity for debt and the question of whether JBS would be able or willing to pay Sara Lee’s intrinsic value, given that less than 40 percent of the company’s value lies in its meat business.

JBS is a logical contender, however,  to acquire Sara Lee’s meat business, said Zaslow, noting that JBS USA recently realigned its management team and named Don Jackson as CEO.

Sara Lee’s meat business has annual income of about $346 million from continuing operations on $2.82 billion in sales, according to the WSJ.

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