Chicago, IL - Consumer goods maker Sara Lee Corp. said it will buy more than 35% of the turkey breast meat for its Bil Mar Foods deli meats unit through outsourcing agreements with global agribusiness firm Cargill Inc. and others.
In a statement, the maker of Ball Park hot dogs, Hanes underwear and many other products said the move was part of a three-year program initiated last fall to sell non-core businesses and increase outsourcing to raise $3 billion for stock repurchases.
Sara Lee said the latest agreement with Cargill and other outsourcing deals will generate about $500 million in cash flow benefits.
Sara Lee's packaged meats division, the nation's fifth largest with annual sales of more than $4 billion, makes brands including Hillshire Farm and Jimmy Dean.
Beginning this month, Sara Lee will buy a "significant portion" of the turkey breast meat requirements for Bil Mar from Cargill, the nation's largest privately held company and fourth-largest turkey processor.
Sara Lee said its Bil Mar unit is also exploring options for buying sliced and cooked meats from Cargill. Cargill currently provides about $125 million in products to Sara Lee divisions in North America.
Sara Lee said several other Sara Lee meat divisions have begun outsourcing production of their processed meat products as well.
"These initiatives enable us to reduce the capital demands on our business units, enhance our competitiveness and focus our efforts on the greater value- added activities involved in building successful brands," Steven McMillan, president and chief operating officer, said in a statement.
Meat Industry Insights News Service
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