Sara Lee updates on sale of European branded apparel business
01 Oct '05
3 min read
Global brand-name products for consumers throughout the world, Sara Lee Branded Apparel announced that it has entered into an exclusive negotiation period regarding the sale of its branded apparel business in Europe with an affiliate of Sun Capital Partners Inc, a leading, U.S. private investment firm based in Boca Raton, Fla. As the parties further their discussions, Sara Lee will consult with employee representatives from the appropriate works councils regarding a potential sale.
Sara Lee Courtaulds, the U.K.-based division that manufactures private-label clothing for retailers, is not part of the potential sale. The company will continue to assess its options in regard to the Sara Lee Courtaulds business, which generated nearly $560 million in sales in fiscal year 2005, which ended July 2, 2005.
Sara Lee's apparel organization in Europe includes branded businesses in France, Germany, Italy, Spain, the United Kingdom and throughout Eastern Europe, and generated nearly $1.2 billion in sales in fiscal year 2005.
Impairment Charges Although a definitive sales agreement has not been executed, on Sept. 23, 2005, Sara Lee's board of directors authorized management to negotiate and enter into a definitive agreement to sell the company's European branded apparel business and, on Sept. 28, 2005, the company agreed to an exclusive negotiation period with an affiliate of Sun Capital Partners, Inc.(Sun).
During the quarter and year ended July 2, 2005, the company previously recognized an impairment loss of $305 million in the European apparel business, with $182 million related to goodwill and $123 million related to indefinite lived trademarks. As a result of differences between the potential transaction terms approved by the board of directors and other nonbinding bids previously received for the business, the company conducted another impairment review of the European apparel business and determined that an additional write down of the business was required.
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