Sara Lee gains on report company rebuffed KKR offer

Sara Lee Corp. climbed the most in almost two years in U.S. trading after the New York Post said the maker of Jimmy Dean breakfast foods rejected a $12 billion unsolicited takeover offer from KKR & Co.

Sara Lee got the offer about six weeks ago, the newspaper said, citing an unidentified person familiar with the situation. The company is seeking a permanent successor to Chief Executive Officer Brenda Barnes, and also aims to sell its bakery business, people familiar with the matter said in July.

Completing those moves would allow Sara Lee to split its U.S. and international businesses and possibly start an auction to sell itself, the New York Post said. Whoever succeeds Barnes faces the challenge of reviving sales that have slumped for two straight years.

"The board may get push-back from investors if it in fact rebuffed a bid," John Baumgartner, an analyst at Telsey Advisory Group in New York, said today by telephone. "The board would need to demonstrate how it is going to create more value."

Sara Lee jumped $1.43, or 11 percent, to $14.86 at 9:42 a.m. after reaching $15.15 on the New York Stock Exchange. That's the highest since Oct. 17, 2008. The shares had gained 10 percent this year before today, compared with a 2.8 percent increase in the Standard & Poor's 500 Index.

Baumgartner has a 12-month price target of $17 to $19 a share for Sara Lee, based in Downers Grove. Telsey doesn't rate the shares of the companies it follows.

Ernesto Duran, a Sara Lee spokesman, said the company won't comment "on market speculation and rumors." Kristi Huller, a spokeswoman at New York-based KKR, also declined to comment.

Seeking SuccessorMarcel Smits is serving as interim CEO and James Crown has kept the job of chairman as Sara Lee seeks a successor. Barnes resigned to focus on her health after taking leave to recover from a stroke.Sara Lee gave a 2011 earnings forecast in August that trailed some analysts' estimates. The maker of Ball Park hot dogs is vying with other foodmakers for sales as consumers keep curbing spending to deal with a slowdown in the economic recovery.Barnes has gotten rid of some divisions to focus on food and beverages, agreeing to sell its body-care and air-freshener divisions this year and seeking the sale of the North American bakery unit. That business has faced increasing competition from less expensive store brands and regional bakers such as Flowers Foods Inc. The operating income dropped by almost two-thirds in the latest quarter to $8 million.KKR's HistoryKKR, run by billionaires Henry Kravis and George Roberts, started trading on the New York Stock Exchange in July after abandoning a 2007 plan to go public amid the global credit crisis. The firm pushed buyouts into the mainstream with the $30 billion purchase of RJR Nabisco Inc. in 1989 and led the record buyout of energy producer TXU Corp. for $43.2 billion in 2007.Private-equity firms take controlling stakes in companies and use borrowed money to finance most of the acquisition. They aim to make money for their investors usually by replacing management, selling off unprofitable assets, extracting dividends and then cashing out at a higher price. <div class="infoBox"><h1>More Coverage</h1><div class="infoBoxContent"><div class="infoArea"><h2>Stories</h2><ul class="links"><li><a href="/story/?id=412868">Did Sara Lee have buyout talks with Apollo? <span class="date">[10/04/10]</span></a></li></ul></div></div></div>