Hillshire Brands Co – ‘SC TO-C’ on 7/2/01 re: Earthgrains Co/DE

On:  Monday, 7/2/01, at 5:09pm ET   ·   Accession #:  950131-1-502121   ·   File #:  5-46087

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Tender-Offer Statement — Preliminary Communication   —   Schedule TO
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: SC TO-C     Schedule to                                            5     22K 

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================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

----------------  

SCHEDULE TO 
(Rule 14d-100)
Tender Offer Statement Under Section 14(d)(1) 
or Section 13(e)(1) of the Securities Exchange Act of 1934

THE EARTHGRAINS COMPANY 
(Name of Subject Company (Issuer))

SLC ACQUISTION CORP.
a wholly owned subsidiary of
SARA LEE CORPORATION
(Names of Filing Persons (Offerors))

COMMON STOCK, PAR VALUE $0.01 PER SHARE 
(Title of Class of Securities)

----------------  

270319-10-6 
(CUSIP Number of Class of Securities) 

----------------  

Roderick A. Palmore, Esq. 
Sara Lee Corporation
Three First National Plaza
Chicago, Illinois 60602-4260
(312) 726-2600

(Name, address and telephone number of
person authorized to receive notices
and communications on behalf of filing persons) 

With a copy to: 
Charles W. Mulaney, Jr., Esq. 
Skadden, Arps, Slate, Meagher & Flom (Illinois) 
333 West Wacker Drive 
Chicago, Illinois 60606 
Telephone: (312) 407-0700 

[_]  Check the box if any part of the fee is offset as provided by Rule 0-      
11(a)(2) and identify the filing with which the offsetting fee was    
 previously paid. Identify the previous filing by registration statement
number or the Form or Schedule and the date of its filing.            

 Amount Previously Paid:  _______________    Filing party: _____________

  Form or Registration No.: ______________    Date Filed:_________________
[X]  Check the box if the filing relates solely to preliminary communications   
made before the commencement of a tender offer.                       

  Check the appropriate boxes below to designate any transactions to which
the statement relates:                                                
[X]     third-party tender offer subject to Rule 14d-1.     
[_]     issuer tender offer subject to Rule 13e-4.          
[_]     going-private transaction subject to Rule 13e-3.    
[_]     amendment to Schedule 13D under Rule 13d-2.         
        Check the following box if the filing is a final amendment reporting
the results of the tender offer: [_]                        

================================================================================

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[Letterhead of Sara Lee Corporation]                                            

Release Date  FOR IMMEDIATE RELEASE                                             

Contact       Media: Hillary Sterling, 312.558.8421                             
Analysts: Janet Bergman, 312.558.8651               

SARA LEE CORPORATION TO ACQUIRE EARTHGRAINS FOR $2.8 BILLION;                   
BECOMES NUMBER-TWO PLAYER IN FRESH BREAD CATEGORY                               

With addition of Earthgrains, Sara Lee's largest acquisition to date, company   
gains a premier direct-store distribution system to leverage the Sara Lee brand 

CHICAGO (July 2, 2001) - Sara Lee Corporation announced today that it has signed
an agreement for the acquisition of St. Louis-based The Earthgrains Company for 
$40.25 per Earthgrains share, payable in cash. The total value of the           
acquisition, including the assumption of Earthgrains' outstanding debt, is $2.8 
billion. With the acquisition of Earthgrains, Sara Lee more than quadruples its 
annual bakery sales to become the nation's second-largest fresh bread company,  
and gains a strong distribution system to extend its Sara Lee brand franchise.  

Sara Lee will make a cash tender offer for all Earthgrains shares at $40.25 per 
share, to be followed by a merger in which remaining Earthgrains shares will    
receive the same cash price per share. The acquisition is subject to receipt of 
a majority of the Earthgrains shares in the tender offer and the approval of    
antitrust authorities. The transaction is expected to be completed in 30 to 60  
days.                                                                           

Earthgrains operates fresh bakery and refrigerated dough businesses with leading
market positions in the United States and Europe. During Earthgrains' fiscal    
year 2001, ended March 27, 2001, the company generated sales of $2.6 billion.   
The company manufactures and markets its bread, buns, rolls, bagels and other   
bakery products in the United States under brand names such as Earth Grains,    
IronKids, Grant's Farm and Colonial, with more than 30% of its retail fresh     
bread sales in the premium and superpremium bread categories. Earthgrains also  
enjoys leading positions in Europe with both its Bimbo and CroustiPate brands.  
Earlier today, Earthgrains announced that it expects to exceed analyst forecasts
for earnings per share in the first quarter of fiscal 2002 by 20%.              

"As a leading player in the fresh bread and refrigerated dough categories,      
Earthgrains is a highly strategic acquisition for our company," said C. Steven  
McMillan, president and chief executive officer of Sara Lee Corporation.        
"Earthgrains is a key element in the investment phase of Sara Lee's reshaping   
program as it creates a strong growth platform for one of our core businesses.  
With the earnings guidance Earthgrains announced this morning, we are even more 
excited about adding this strong performer to our business portfolio."          

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Sara Lee Corporation To Acquire                                                 
Earthgrains for $2.8 Billion - Page 2                                           

The acquisition of Earthgrains is consistent with Sara Lee's reshaping program  
under which the company continues to build leadership positions in three highly 
focused business segments: Food and Beverage, Intimates and Underwear, and      
Household Products.                                                             

The bakery operations of Sara Lee and Earthgrains, which together generate      
approximately $3.4 billion in sales, complement each other.                     

"The Sara Lee brand is one of our company's most recognizable and valuable      
assets, and Earthgrains' management team has built a powerful, industry-leading 
direct-store delivery system that we can use to significantly expand this brand 
into the fresh baked and refrigerated dough segments," said McMillan. "We have  
already experienced tremendous success taking the Sara Lee brand from its       
historical leadership in frozen desserts to innovative new products such as deli
meats, pre-sliced cheeses, and fresh bagels and specialty breads. Earthgrains   
provides the opportunity to extend this brand further, in both existing and new 
product categories."                                                            

Sara Lee anticipates increased annual revenues, above and beyond expected       
organic growth, of more than $300 million through expanded distribution and     
extended use of the Sara Lee brand within five years.                           

The acquisition of Earthgrains provides Sara Lee with several key strategic     
benefits:                                                                       

 .    In the United States, Earthgrains operates one of the food industry's pre-
eminent direct-store distribution systems (DSD), comprised of 4,900   
    company-owned routes. With its extensive DSD system, Earthgrains holds the
    number-two position in the fresh bread category, and it enjoys the number-
    one position in its 34-state sales territory, which currently reaches more
than 50% of the U.S. population. Combined, Earthgrains' and Sara Lee's
 routes will immediately grow Sara Lee's DSD coverage to 61% of the U.S.
population and create significant future expansion opportunities.     

 .    Earthgrains' second-largest business is the manufacturing and marketing of
 refrigerated dough products in the United States and Europe. In Europe,
Earthgrains enjoys the number-one position in refrigerated dough in   
    France - Europe's largest refrigerated dough market. In the United States,
   Earthgrains is a major producer of private-label refrigerated dough - and
     the only supplier of private-label products to retail supermarkets - with a
  successful strategy that includes the rapid development of popular high-
quality, value-priced products for this market.                       

.    Earthgrains has a profitable international presence, providing another   
    significant growth platform for Sara Lee's bakery operations. Earthgrains'
    European fresh bakery business is led by the well-known Bimbo brand, which
   holds a 55% share of the Spanish fresh bread market and a 30% position in
 that country's packaged sweet goods market. To support the Bimbo brand,
 Earthgrains operates 1,100 DSD routes in Spain, Portugal and the Canary
Islands.                                                              

.    Earthgrains has a highly respected management team that has grown        
  Earthgrains' sales at a compound annual growth rate of 12%. Earthgrains'
     growth was achieved both through the successful acquisition and integration
    of 12 companies and by building the company's superpremium brand presence.

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Sara Lee Corporation To Acquire                                                 
Earthgrains for $2.8 Billion - Page 3                                           

 .   Earthgrains has built a superior business model through the development and
   use of state-of-the-art technology. Specifically, Earthgrains is a leader
    in category management through proprietary ordering and assorting software
   that allows unique customer needs to be met. The company has successfully
   implemented SAP, with the rollout of the first modules in 1996, and it is
currently using scan-based trading with six major customers in 2,100  
 stores, allowing Earthgrains to synchronize supply and demand trends to
increase sales and reduce invoice errors.                             

"The purchase by Sara Lee and the combination of our baking businesses          
represents an outstanding value to the shareholders of both companies," said    
Barry H. Beracha, chairman and chief executive officer of The Earthgrains       
Company. "This is a strategic combination that brings the power of strong brands
in the fresh, refrigerated and frozen baking segments. We will create a premier 
bakery company through our new-product potential, extensive direct-store and    
warehouse delivery systems, superior information technology systems, and ability
to continue making acquisitions. This acquisition is overwhelmingly positive for
shareholders, employees, customers and consumers."                              

Beyond the technological and distribution strengths gained from this            
acquisition, Sara Lee will also realize significant cost savings through        
operational synergies.                                                          

"Consolidation within the U.S. baking industry is accelerating, and this        
acquisition will transform the size and scale of Sara Lee's current bakery      
operations. The new business will be more competitive and certainly more        
profitable than our separate, existing operations," said McMillan. "Adding      
Earthgrains will allow us to improve our supply chain management in several key 
areas including purchasing, plant utilization and distribution, and we          
anticipate achieving cost synergies of more than $45 million annually by fiscal 
year 2004."                                                                     

In the first year, Sara Lee anticipates the acquisition to add approximately    
$.04 to cash earnings per share (EPS), and to dilute accounting EPS by          
approximately $.03. These forecasts reflect the new accounting rules relating to
goodwill amortization that were adopted by Sara Lee July 1, 2001, the beginning 
of the company's fiscal year. After the first twelve months, the acquisition is 
expected to add to both cash and accounting EPS. Separately, the new accounting 
rules will add approximately $.08 to Sara Lee's EPS in fiscal 2002, bringing our
current forecasted range to $1.30 to $1.40, including the impact of the         
Earthgrains acquisition.                                                        

J.P. Morgan acted as financial adviser to Sara Lee in this transaction.         

A review of the Earthgrains acquisition, featuring Steve McMillan, Sara Lee     
president and chief executive officer, will be broadcast live via the Internet  
today at 8:30 a.m. (CDT). McMillan will be joined by Barry Beracha, chairman and
chief executive officer of The Earthgrains Company. The live webcast can be     

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Sara Lee Corporation To Acquire                                                 
Earthgrains for $2.8 Billion - Page 4                                           

accessed at www.saralee.com, and will last approximately 45 minutes. For people 
who are unable to listen to the webcast live, it will be archived two hours     
following the completion of the webcast in the Investor Relations section of the
Sara Lee corporate Web site for 10 business days.                               

Forward-Looking Statements                                                      
--------------------------                                                      

Certain statements contained in this press release may constitute "forward-     
looking statements" as defined under federal securities law. Forward-looking    
statements include statements regarding revenue growth, cost savings,           
operational synergies and geographic expansion that Sara Lee anticipates        
achieving as a result of this transaction, and also other statements that begin 
with "expects," "anticipates," "intends" or similar words. These forward-looking
statements, which are made in reliance on the "safe harbor" protections provided
under the Private Securities Reform Act of 1995, are based on currently         
available competitive, financial and economic data and management's views and   
assumptions regarding future events. Such forward-looking statements are        
inherently uncertain, and actual results may differ materially from those       
expressed or implied herein. Consequently, Sara Lee cautions readers not to     
place undue reliance on any forward-looking statements. Additional information  
about issues that could lead to material changes in performance is contained in 
Sara Lee's annual and quarterly reports filed with the Securities and Exchange  
Commission.                                                                     

Additional Information                                                          
----------------------                                                          

Earthgrains shareholders are advised to read the tender offer statement         
regarding the acquisition of Earthgrains, referenced in this press release,     
which will be filed by Sara Lee with the U.S. Securities and Exchange Commission
(SEC), and the related solicitation recommendation statement which will also be 
filed by Earthgrains with the SEC. The tender offer statement (including an     
offer to purchase, letter of transmittal and related tender offer documents) and
the solicitation/recommendation statement will contain important information    
which should be read carefully before any decision is made with respect to the  
offer. These documents will be available at no charge at the SEC's website at   
www.sec.gov and may also be obtained from Sara Lee by directing a request       
through the investor relations portion of Sara Lee's corporate Web site at      
www.saralee.com or by mail to Sara Lee Corporation, 70 W. Madison Street,       
Chicago, Illinois 60602, Attn: Investor Relations, Telephone: (312)558-4966.    

Sara Lee Corporation is a global branded consumer packaged goods company with   
approximately $17.5 billion in annual revenues. Its leading brands include Sara 
Lee, Douwe Egberts, Hillshire Farm, Kiwi, Hanes and Playtex.                    

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Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘SC TO-C’ Filing		Date		First		Last			Other Filings
Filed on:		7/2/01		2					8-K
		7/1/01		4
		3/27/01		2					10-K405
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