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Announcement:

Moody's reviews Sara Lee Baa1 rating on split plan

28 Jan 2011

Possible downgrade likely limited to one notch; Prime-2 rating is affirmed.

New York, January 28, 2011 -- Moody's Investors Service, Inc. ("Moody's") today placed the Baa1 long-term rating of Sara Lee Corporation ("Sara Lee") under review for possible downgrade following the company's announcement of its plan to divide into two separate, publicly traded companies and to pay a $3 per share special dividend. Moody's affirmed the company's Prime-2 short-term rating.

The rating review reflects Moody's belief that Sara Lee's planned spin off plan and special dividend will result in a weaker credit profile of the remaining Sara Lee businesses. The affirmation of the Sara Lee's Prime-2 short-term rating is based on Moody's expectation that in the event of a downgrade of Sara Lee's long-term rating, it likely would be limited to one notch. Moody's expects that Sara Lee's ratings will remain under review for possible downgrade until the spin off has substantively been completed, expected in early 2012.

Sara Lee plans to separate its North American Retail and most of its North American Foodservice businesses into a new publicly traded company (roughly half of Sara Lee's existing business) that will retain the "Sara Lee" name. In addition, Sara Lee plans to pay a special dividend of $3 per share, or approximately $1.7 billion, following the completion of the pending $959 million sale of its North American Bakery business.

"The proposed separation of the meats and coffee businesses should not present any major operational challenges, but Sara Lee will be reduced to half its current size and net leverage at closing will likely be higher," said Brian Weddington, Moody's senior credit officer. "However, based on the company's target gross leverage of two times EBITDA, we expect that the post-spin company will be rated no lower than Baa2," added Weddington

The remaining businesses, consisting primarily of Sara Lee's international coffee and bakery businesses, will be the subject of Moody's rating review. The review will focus primarily on the post-spin capital structure, and will consider the smaller scale, reduced sales diversification, and future operating strategy of the remaining businesses.

Ratings placed under review for possible downgrade:

Sara Lee Corporation:

Senior unsecured long-term debt rating at Baa1;

Senior unsecured MTN rating at Baa1;

Senior unsecured long-term debt shelf at (P)Baa1;

Senior unsecured preferred stock shelf rating at (P)Baa1;

Sara Lee / DE Antilles NV:

Senior unsecured long-term debt rating at Baa1;

Sara Lee Investments:

Senior unsecured long-term debt rating at Baa1.

Ratings affirmed:

Sara Lee Corporation:

Short-term debt rating at Prime-2.

Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.

The principal methodology used in rating this issue was the Global Packaged Goods Industry Methodology, which can be found at www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating this issue can also be found in the Rating Methodologies sub-directory on Moody's website.

Sara Lee Corporation ("Sara Lee"), headquartered in Downers Grove, Illinois, is a global manufacturer and marketer of branded food, beverage and other consumer products. In fiscal 2010, Sara Lee generated approximately $10.8 billion in net sales. Core brands include: Ball Park, Douwe Egberts, Hillshire Farm, Jimmy Dean, and Sara Lee. The company has approximately 33,400 employees worldwide.

New York
John Diaz
MD - Corporate Finance
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Brian Weddington, CFA
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Investors Service
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's reviews Sara Lee Baa1 rating on split plan
No Related Data.
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