Sara Lee moves on Ball Park sale speculation
Sara Lee Corp. call-options trading jumped to more than five times the four-week average on speculation that the maker of Ball Park hot dogs may be acquired.
Almost 11,000 calls to buy the stock changed hands, six times the number of puts to sell. Nearly half of the call volume was concentrated in December $16 calls. The shares slipped 12 cents to $15.59 as of 4 p.m. in New York after gaining as much as 2.2 percent.
“There are a lot of rumors out there about food companies potentially being acquired,” said Steven Williams, an options strategist at Louis Capital Markets LP in New York. “Most likely the options trading is just people taking a shot that it'll be bought out.”
Mike Cummins, a spokesman for Downers Grove-based Sara Lee, declined to comment on takeover speculation.
Sara Lee, led by interim Chief Executive Officer Marcel Smits, attracted interest from buyout firms Apollo Global Management LLC and KKR & Co. earlier this year, people with knowledge of the situation said in October.
“There's chatter that Sara Lee accepted an offer from private-equity firms,” said Jamie Lissette, founder of the Hammerstone Group, a Westport, Connecticut-based operator of online discussion forums for investors. “The December $16 calls have been exploding with volume.”
The company is getting rid of businesses, such as its North American fresh bread division, to focus on faster-growing areas such as meat and coffee. Smits agreed last month to buy Brazilian coffee maker Café Damasco SA, the country's seventh- largest coffee roaster. Sara Lee's other food brands include Ball Park hot dogs and Jimmy Dean breakfast items.
The remaining unsold portion of the household business at Sara Lee generates about $400 million in annual sales, Cummins said.
Earlier this week, Sara Lee completed the sale of its body care and European detergents business to Unilever for $1.21 billion euros ($1.6 billion). At the same time, the company said it has received “significant interest” in the rest of its household business, which includes shoe-care and Asian cleaning brands.