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Sara Lee Corporation recently announced that it has acquired a small Brazilian espresso coffee maker, Expresso.Coffee. The acquired business already holds a license to sell coffee under Sara Lee’s Pilão brand in more than 1,000 coffee shops across São Paulo and Rio de Janeiro.

Financial terms of the deal were not disclosed. The acquisition places Sara Lee in the fast growing and attractive markets of São Paulo and Rio de Janeiro.

Sara Lee is on track to split the company into two publicly traded companies: an international coffee and tea business and a North American retail, foodservice and specialty meats business. Post spin-off, the international coffee and tea business will be domiciled in the Netherlands and will move its headquarters to Amsterdam in the second half of 2012.

Its operations will be spread across Europe, Brazil, Australia and Thailand and will include popular tea and coffee brands such as Douwe Egberts, Senseo, L’OR EspressO, Marcilla, Pilão, Moccona, Pickwick and Hornimans.Sara Lee will name its international coffee and tea business, D.E Master Blenders 1753. The spin-off is expected to be completed by June this year.

The spin-off is part of Sara Lee’s plan to trim its portfolio in order to provide the best foundation for a strong and focused business. Sara Lee has been shedding its redundant units one by one to focus on its most profitable food and beverage businesses.

Our Recommendation

We currently have a Neutral recommendation on Sara Lee Corporation. The stock carries a Zacks #2 Rank (short-term Buy rating).

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