Chicago-based meat company,The Hillshire Brands Company recently announced that it has entered into an agreement to sell its Australian subsidiary to Canadian frozen food company McCain Foods Limited for approximately $85 million.
Hillshire’s Australian subsidiary, Kitchens of Sara Lee Pty Ltd, mainly deals in the bakery business. The subsidiary sells bakery items that are produced at its sole manufacturing facility in Australia to retail and foodservice customers under the Sara Lee brand name. It supplies these products throughout Australia and other parts of the Pacific Rim.
The divestment of this subsidiary will enable Hillshire to concentrate on its key North American retail and food businesses. The spin-off is expected to close in the first half of calendar 2013.
Hillshire Brands Company came into existence in June 2012, after Sara Lee Corporation divested its international coffee and tea business into a separate publicly traded company. After the spin off, Sara Lee Corporation changed its name to Hillshire Brands Company.
Hillshire Brands carries Zacks#2 Rank (short term ‘Buy’ rating) following solid first quarter fiscal 2013 results. The company reported adjusted earnings of 51 cents per diluted share, which comprehensively beat the Zacks Consensus Estimate by 59.4%. Earnings also grew 59% year over year driven by strong top-line growth. Sales grew 2.0% from the prior-year quarter to $1.01 billion on the back of volume growth and the strong performance of the retail segment. Peer Company Smithfield Foods, Inc. carries a Zacks#1 Rank (short term ‘Strong Buy’ rating).