Description: Sara Lee Corp (SLE.N)will sell its personal care brands like Sanex and Brylcreem for $1.87 billion (1.275 billion euros) to consumer goods giant Unilever and set a $1 billion share buyback plan, sending its stock up 6 percent. Sara Lee also said on Friday it has seen significant interest in its household products business, which includes Ambi Pur air freshener and Kiwi shoe polish. The divestitures allow it to focus on its food and beverage businesses like Sara Lee baked goods and Hillshire Farm meats.

Source: Reuters.com

Date: 9/25/2009

Keys: Mergers and acquisitions, divestitures, stock market

Link: http://www.reuters.com/article/marketsNews/idUSLP41983520090925

Questions for discussion:

• What are the arguments favouring this decision?
• How might this decision impact future cash flow for each firm? Explain your thinking.
• Do you think this decision will work out better for one firm? Explain why you think so.