Sara Lee Corporation has approved a distribution ratio, record date, and distribution date for the tax-free spin-off of its apparel business. The spin-off will create a stand-alone, publicly traded company called Hanesbrands Inc., whose shares are expected to begin trading on the New York Stock Exchange under the symbol “HBI,” beginning on Sept. 6, 2006.
Sara Lee will complete the spin-off by distributing Hanesbrands common stock in a pro rata dividend to Sara Lee shareholders. Sara Lee shareholders will receive one share of Hanesbrands common stock for every eight shares of Sara Lee common stock held as of the close of business on Aug. 18, 2006. Sara Lee’s distribution of Hanesbrands common stock is expected to occur on Sept. 5, 2006. All of the Hanesbrands shares owned by Sara Lee will be distributed to Sara Lee shareholders.
“The spin-off will give our shareholders stock in two great companies – Sara Lee and Hanesbrands – that are both tightly focused and well-positioned for enhanced growth and financial performance as independent entities,” said Brenda C. Barnes, chairman and chief executive officer, Sara Lee Corporation.
In August, Sara Lee received a ruling from the Internal Revenue Service that the spin-off will qualify as a tax-free distribution under U.S. tax rules.
Sara Lee currently has approximately 761 million shares outstanding, and based on the distribution ratio, approximately 95 million shares of Hanesbrands common stock will be distributed to Sara Lee shareholders. Sara Lee will not distribute fractional shares of Hanesbrands common stock in the spin-off. Shareholders will receive a cash payment for their fractional shares, after making appropriate deductions for any required tax withholdings.
“When the spin-off is complete, Sara Lee will have raised more than $3.7 billion since the beginning of our transformation,” added Barnes. “So, not only will our shareholders now own two strong companies with market-leading brands, but also Sara Lee will return significant capital to our shareholders through buying back stock, reducing debt and continuing to pay a healthy dividend, while funding the growth of our core businesses.”
