Coach(COH) handbags and Hanes(HBI) underwear, is aiming spin off its Coffee & Tea business(CoffeeCo) in April or May, though no final date has been set. As the date finally approaches(this was first announced a year ago), the company is taking steps to prepare(though it still hasn’t selected a name).
Earlier this month, the company sold its North American foodservice coffee & tea business to J M Smucker. Today, the company announced that it will purchase the 50% of the Senseo trademark that it does not own from Philips for $230 million. At the same time, Philips and Sara Lee entered into a 9 year agreement whereby Philips will continue to design, manufacture and sell Senseo systems.
It is interesting that the company is spending this much to acquire the trademark. Senseo will stop distributing its products in North America on March 31, 2012- a stunning reversal for a company that claimed leadership in 2005. The product continues to be in a stronger position in Europe, which will be the focus of CoffeeCo’s business.
Disclosure: Author is long shares in SLE
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