JBS may consider revised takeover offer for Sara Lee

JBS SA, the Brazilian meat processor, is considering making a revised offer to buy Sara Lee Corp. after its bid last month was rejected as too low, according to two people with knowledge of the matter.

JBS executives are traveling to the U.S. this week to help prevent their takeover efforts from collapsing, said the people, who declined to be identified because the matter is private. JBS offered about $17.50 a share for Sara Lee in mid-December, valuing Sara Lee at about $11 billion, the people said.

Downers Grove-based Sara Lee hasn't given JBS a purchase price, though the company is likely looking for about $20 a share, or almost $13 billion, one person said. JBS, which is being advised by JPMorgan Chase & Co., has been trying to determine whether to raise its bid while it seeks potential ways to raise more money, said another person.

Sara Lee, the owner of meat and coffee businesses, has also been weighing spinning off one of its main units, according to the people. Sara Lee's European coffee division is the likeliest to be spun off to shareholders as a new company, said one person, adding that no final decision has been made.

The international beverage unit is the company's biggest, with sales totaling $3.2 billion in the year ended in June.

Sara Lee's board is scheduled to meet at the end of the month to make a decision about whether to sell or break up the company, the person said.

Mike Cummins, a Sara Lee spokesman, declined to comment, as did a spokesman for Sao Paulo-based JBS.

JBS has made more than a dozen acquisitions since 2007, expanding into the U.S., Australia and Europe. The Brazilian company acquired Swift & Co. in 2007 and two Smithfield Foods Inc. units in 2008. It also bought poultry producer Pilgrim's Pride Corp. in 2009 to diversify from beef.

JBS Chief Executive Officer Joesley Mendonca Batista, 38, has said his company will continue to expand as it seeks more acquisitions in the U.S. and Brazil, the world's biggest beef producers, as well as other countries.

Sara Lee's North American retail meat business, whose sales topped $2.8 billion in the year ended in June, would account for more than 15 percent of JBS's total revenue.

Over the past five years, there have been 254 global deals in the meat industry, with a median multiple of 6.4 times earnings before interest, taxes, depreciation and amortization, or EBITDA, according to data compiled by Bloomberg.

Buyout firm Apollo Global Management LLC has teamed with investor C. Dean Metropoulos to consider a bid for Sara Lee, the Wall Street Journal reported yesterday, citing unidentified people familiar with the matter. The group also includes Bain Capital and TPG Capital, the Journal said.

Sara Lee attracted interest from buyout firms including Apollo and KKR & Co. last year, people with knowledge of the matter said in October. The company, whose total sales topped $10 billion last fiscal year, has divested other businesses, such as its North American bakery unit and its global shoe care division, to focus on coffee and meat.

Marcel Smits has led the company since former Chief Executive Officer Brenda Barnes resigned for health reasons last year. The board has been seeking a permanent replacement.