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Streamlining Sara


Streamlining Sara Sara Lee, the Downers Grove, Illinois-based foods company, is considering a divestiture of its European household business segment.

The company will focus on its core business of food manufacturing and has enlisted Goldman Sachs as its financial adviser for a possible divestiture of the overseas division.

The business unit in question includes household and personal-care products, and accounts for roughly 15% of Sara Lee’s total sales and 21% of its earnings before interest and taxes.

According to a Deutsche Bank analyst report obtained from Thomson One Analytics, the European division could fetch as much as $2.4 billion, assuming a purchase price multiple of 8.5x Ebitda and a 20% tax cost.

A Wall Street Journal report speculated that Unilever, Reckitt Benckiser Group, S.C. Johnson & Son and Colgate-Palmolive Co. could be among the bidders for the assets.

Since 2006, the company has divested several ancillary units, including the Hanes apparel unit, European meat business and European branded apparel. The potential divestiture of its European household business unit is seen as an attempt to further streamline the company’s operations to a more narrow focus.

A noble cause Private school operator Nobel Learning Communities rebuffed the latest offer from Knowledge Learning Corp., a cash bid valued at $13.50 a share, or $141 million. In a letter to the suitor, Nobel said it was open to strategic transactions, but the current offer “significantly undervalues” the company.

Knowledge Learning had previously made an unsolicited bid of roughly $186 million for Nobel in September, valuing the stock at $17 a share – a 33% premium at the time. In March, however, the company cut its offer to $13.50 a share.

In a letter to Knowledge Learning, Nobel president and CEO George Bernstein noted that the bidder declined to review non-public information that was made available to Knowledge Learning as well as other interested parties.

“We are disappointed in your unwillingness to participate fully in that process and in your unilateral and unwarranted reduction in your proposed price,” Bernstein wrote, adding that the company’s largest stockholder has disclosed that it would not sell its shares at a price below the original $17.00 per share bid.

Bernstein also acknowledged the difficult markets, but insisted that the company is not in a position where it will have to sell itself in order to survive. “Our Ebitda margins continue to be robust, we have little long-term debt and we have a strong balance sheet,” he added.

Nobel, in the second quarter, recorded Ebitda of $6.3 million, representing a 17% jump over the year-ago period, on revenues of $56.4 million. In the earnings conference call, Bernstein noted that Nobel is itself seeking out acquisitions to pursue growth. At the time, he revealed that Nobel had $56 million under its existing revolver to pursue deals, with an accordion feature that adds the potential of another $25 million. Nobel recently acquired Country Time preschool.

We’re good, thanks CosA[logical not], Inc.’s toast-your-own smores may tempt daters on a budget, but potential buyers were left largely unimpressed. After conducting a strategic review, the restaurant chain abandoned its sales process, choosing instead to remain as an independent public company. As of press time, CosA[logical not] was trading at $0.31 a share, representing a market cap of $14 million.

CosA[logical not] owns and operates 97 locations in 18 states, and franchises another 48 restaurants. The company, which serves breakfast, lunch, and dinner, logged $136 million in sales last year, reporting a loss of $7 million, matching the year-earlier deficit.

In a statement, CosA[logical not] said it received several proposals, which also included potential financing alternatives. Ultimately, however, the board believes the best bet to boost shareholder value is to remain an independent public company. “Therefore, the company is terminating all discussions regarding a potential transaction and disbanding the special committee previously formed to explore strategic alternatives,” the company said.

Jonathan Gallen and Zam Equities are the two biggest investors in CosA[logical not]’s stock, holding roughly 12% and 11%, respectively.