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WSJ: Sara Lee To Sell Some European Businesses

Wall Street Journal reported that company is looking to sell its household and personal-care business in Europe; deal could fetch more than $2 billion.

MILWAUKEE (AP) -- Shares of Sara Lee Corp. rose on Friday after news reports that the company is looking to sell its household and personal-care business in Europe to focus on its core domestic food business.

Shares rose 50 cents, or 6.9 percent, to $7.77 in morning trading Friday.

The Wall Street Journal reported in editions Friday that the Downers Grove, Ill.-based company is looking to sell its household and personal-care business in Europe, where it sells products like Kiwi shoe polish and Bloom insecticides. An article said the deal could fetch more than $2 billion and the company has hired Goldman Sachs Group Inc. to look for bidders.

Spokesman Mike Cummins said the company would not comment on what he called rumors and speculation.

Deutsche Bank-North America analyst Eric Katzman wrote in a note to clients that the European business likely had few overlaps with the rest of the company's portfolio, which includes its namesake breads and Jimmy Dean sausages, saying such a sale would be "logical." He noted a sale would allow "management to solely focus on food and beverage."

Household and bodycare accounts for about 15 percent of the company's sales and 21 percent of its earnings before interest and taxes.

Business has been slumping as consumers overseas pull back on their spending amid the economic crunch. In the company's second fiscal quarter, which ended in December, net sales in the segment dropped 15.7 percent to $490 million, due to a 3.2 percent drop in unit volumes and unfavorable foreign currency exchange. As the U.S. dollar gains strength, that weighs on companies that do business overseas.

The company has been streamlining its business in recent years, including spinning off apparel maker Hanesbrands in 2006. Food makers are shedding unprofitable businesses as they try to focus on their best-selling brands that make more money amid the economic slowdown.

Katzman wrote that competition has increased in the household and bodycare segment in recent years as companies look to make niche products for air and body care. He noted that because Europe is under economic pressure, that might limit the bids Sara Lee would receive.

He valued the business at $2.4 billion and said that would be equal to about $2.50 a share.

The company's stock has fallen in the past year and is already off about 20 percent since January. It has traded as high as $15.07 in the past 52 weeks. Katzman has a price target of $11 on the stock.

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