McCain Foods has announced it will offload frozen desserts brand Sara Lee. McCain has owned the iconic ice cream and frozen cheesecake (among other bakery delights) manufacturer for eight years.
McCain paid $82 million for the company in an all-cash deal from its US owner Hillshire Brands.
Sara Lee was founded in 1971 and is best known for its frozen desserts including cheesecakes, pies and cakes. It also has a range of premium ice creams.
The comfort eating COVID-19 era resulted in $96 million in sales in FY20 and more than $15 million in earnings before interest, tax, depreciation and amortisation (EBITDA). Baked goods accounted for 31 per cent of sales and ice creams 17 per cent.
McCain has hired Rothschild Australia to manage the sale, who is spruiking Sara Lee as a “multi-category power brand” with opportunities to two $1 billion+ categories – frozen desserts and baked goods.
Sara Lee has 53 per cent of the frozen dessert market in Australia and New Zealand, Rothschild said.
The Australian Financial Review said Sara Lee’s facility had a site replacement value of more than $160 million. There was also room for significant increases in production due to the site only being 50 per cent utilised.
In a statement from McCain Foods:
The Sara Lee business, and the Lisarow plant, continues to deliver great results for McCain Foods – most recently achieving more than 50 per cent category market share for the first time in both Australia & New Zealand. We have invested strongly in innovation for the Sara Lee brand and the Lisarow processing plant, with more than $40 million dedicated to improving the plant’s capabilities, particularly the instalment of our state-of-the-art pastry line.
McCain has been approached regarding the opportunity to acquire the Sara Lee business. While at this point no decision has been made, it is sensible for McCain to explore alternative options for the unique Sara Lee portfolio, as driving synergies and new value with our core potato business in retail and food service continues to be a challenge and a necessary focus.
McCain is working with Rothschild & Co to review the market opportunity to determine the best and most sustainable outcome for McCain and Sara Lee.
For Sara Lee right now, it is business as usual.