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Sara Lee stock rises on speculation about a possible buyout

Sara Lee stock rises on speculation about a possible buyout

Speculation that Sara Lee Corp. might go private amid continued skepticism on Wall Street about its restructuring helped push the food and household goods maker's stock higher Wednesday.
Sara Lee, whose brands include Jimmy Dean packaged meats, Hanes underwear and its namesake baked goods, has been struggling to gain favor with investors while overhauling its operations and shedding businesses following years of sluggish results.
But rumors of a possible leveraged buyout prompted unusually heavy trading Tuesday in Sara Lee call options _ options to buy its stock at a predetermined price by a particular date _ reflecting some investors' bets that the stock could go up dramatically.
That interest spilled over into the stock market on Wednesday, nudging its stock to its highest level in a month. Sara Lee shares rose 27 cents, or 1.7 percent, to close at $16.33 on the New York Stock Exchange. They have been in decline since Brenda Barnes took over as CEO in February 2005 to oversee a restructuring.
The Financial Times, citing unidentified people familiar with the matter, reported Wednesday that the Chicago-based company is considering going private. The London-based newspaper said a number of private equity firms have inquired about its willingness to accept a leveraged buyout.
Sara Lee spokeswoman Julie Ketay said the company would not comment on rumors or speculation in the marketplace.
"Brenda and the senior management team have said they are 100 percent focused on our plan to transform Sara Lee into a high-performing company," she said. "And they've said they believe Sara Lee is more valuable as a focused, independent organization."
The report comes at a time when the market is rife with speculation about possible buyouts in the wake of the proposed $15 billion buyout of Harrah's Entertainment Inc. by two private equity firms.
Some analysts are dubious about the likelihood of an LBO involving Sara Lee, particularly given its challenges. The company has shed 40 percent of its businesses since a February 2005 restructuring but hasn't yet produced evidence of a turnaround and has numerous obstacles still to overcome.
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Updated : 2021-04-18 10:19 GMT+08:00