Sara Lee to Buy Damasco Coffee Business

Sara Lee Corp. signed an agreement to acquire Cafe Damasco, a coffee business based in the southern region of Brazil. The acquisition price represents a multiple of around one time annual sales. The transaction is expected to close on November 30 and will be filed with the Brazilian competition authorities for review and approval.

 With its premium positioned Damasco brand and several smaller brands, Cafe Damasco has a leading regional position in the southern state of Parana. Total net sales of the Cafe Damasco company in 2009 were close to $60 million.

"The acquisition of Cafe Damasco will create a stronger foothold for Sara Lee in the Brazilian territory, given Damasco's strong market position in the southern part of Brazil. We will benefit from Damasco's strong sales and distribution network in the South. The transaction will also deliver manufacturing synergies in our facility in the Sao Paulo region, as well as an improved competitive position in the Northeast thanks to the excellent Damasco manufacturing facility in that area," says Frank van Oers, chief executive officer, Sara Lee international beverage and bakery. "With our current brands Pilao and Caboclo, we already have a relevant market position in the central regions of Sao Paulo and Rio de Janeiro, which account for roughly half of the total Brazilian coffee market."

Brazil is the No. 1 coffee producing country in the world and the second-largest coffee consuming country. Sara Lee is the market leader in Brazil, offering a variety of brands, including its core coffee brands: Pilao, Caboclo, Cafe do Ponto, Moka, and Seleto.