Sara Lee has sold its UK bakery business to Hibernia.

The troubled food and consumer goods giant has been ridding itself of non-core businesses since January this year. The Sara Lee bakery brand was the last of the planned divestitures. Sara Lee can now concentrate on the much-needed restructuring program, but it is going to take a lot of work to get the business into shape.

The UK bakery business sale marks the end of Sara Lee's eight-piece divestiture program, announced earlier this year. The bakery division manufactures, markets and distributes frozen baked goods under the Sara Lee name and private label brands. Dublin-based Hibernia Foods has now acquired the licensing rights to the Sara Lee bakery brand, for use in the UK and Ireland, and other brand names including Death by Chocolate, Kaysens and Finnegans Famous Cakes.

Sara Lee is reshaping itself to focus on a smaller number of segments - food and beverages, underwear and household products. The plans were announced in January 2001 and it hasn't taken long to find buyers for all eight of the non-core units, including Couch leather goods and the food-service operation, PYA/Monarch.

"The divestiture of Sara Lee Bakery UK further illustrates our commitment to reshaping our portfolio to focus on businesses that have the greatest potential for growth" explained C. Steven McMillen, president and CEO of Sara Lee. "The European bakery market is extremely fragmented and does not offer strong opportunities for building a pan-European branded bakery position."

No financial details of the latest sale were released, but the entire divestiture program is expected to generate $2.5-3 billion. Sara Lee is planning to use this money to repurchase stock, retire debt and fund acquisitions more in line with its new focus.

Sara Lee is still in desperate need of improvements. In late May, the food and consumer goods giant issued a warning that profits for fiscal 2002, starting on July 1, could be up to 16% lower than expectations. The company expects a weak retail environment, systems upgrades, poor exchange rates and restructuring costs to all eat into profits. But with the sale of secondary businesses now over, Sara Lee will be able to concentrate on centralizing the remaining, highly separate businesses. Until this reorganization is complete, something that will probably take at least another year, Sara Lee is not going to be having a smooth ride.

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