The Sara Lee Corp. (SLE) board of directors on Thursday approved the spin-off of its international coffee and tea business. The board also approved a special dividend of $3.00 per share as well as a 1-for-5 reverse stock split immediately after the separation.
The packaged food maker's shares climbed about five percent in extended trade, following the announcement.
Last year, Sara Lee announced plans to split the company into two separate publicly traded companies. One entity would be the international coffee and tea business to be named D.E Master Blenders 1753 and the second a North American meat unit.
Sara Lee said the distribution of common stock for the coffee and tea business will be made after market closes on June 28 to shareholders of record as of June 14. The international coffee and tea business will also pay a $3.00 per share special dividend immediately after the separation.
Immediately after the separation and prior to the market open on June 29, Sara Lee will effect a 1-for-5 reverse stock split of common stock. As a result, every five shares of Sara Lee common stock will be converted into one share.
Sara Lee also said that after the distribution of special dividend, the separated coffee and tea business will merge with a subsidiary of D.E Master Blenders 1753.
Separately, Sara Lee said Christopher Begley will serve as non-executive chairman of the board of North American meat unit, following the spin-off. Begley is currently a director of Sara Lee and the former chairman and chief executive officer of Hospira Inc.
Meanwhile, as previously announced, Jan Bennink, currently executive chairman of Sara Lee Corp., will serve as non-executive chairman of the board of D.E Master Blenders 1753.
Early this month, Sara Lee reported a loss for the third quarter compared to profit last year, despite sales growth, hurt by charges and significantly lower operating margins.
SLE closed Thursday's trading on the NYSE at $20.90, down 0.71%, on a volume of 10 million shares. The stock gained 4.69% in after-hours trading.
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