CHRISTCHURCH, NEW ZEALAND — New Zealand-based investor group South Island Office (SIO) has reached an agreement to acquire the Sara Lee desserts and baked foods business in Australia from McCain Foods (Aust) Pty. Ltd. Financial terms of the transaction, which is part of a partial management buyout with Sara Lee’s existing managing director, were not disclosed.
Once completed, the transaction will combine Sara Lee with Christchurch-based baking company Original Foods Baking Co., which SIO acquired in February.
McCain acquired the Sara Lee business from Hillshire Brands Co. in 2013 for approximately $85 million. At the time, the move was described as a way for McCain to expand its range of products across desserts, meals and snacking occasions. As part of its strategy to grow the Sara Lee business, McCain named Mark Mackaness as a dedicated general manager in 2019 to build standalone business capability, operating independently from McCain and allowing for a relatively seamless transition of the business. Then, in October 2020, McCain hired an investment banker to auction the Sara Lee business.
Following SIO’s acquisition of Sara Lee, Mr. Mackaness will become an equity partner and group chief executive officer. Sara Lee’s leadership team will be staying with the business, allowing for continuity for teams, customers and suppliers, SIO said.
“Sara Lee is almost entirely complementary to Original Foods Baking Co.,” Mr. Mackaness said. “Original Foods Baking Co. is already branching out to Australia and beyond with its range of brownies, slices, bites and more. At Sara Lee, we have built an iconic Australian bakery brand, and our quality ice cream, cheesecakes, apple pies, danishes and puddings have been a household favorite in Australia and New Zealand for 50 years.
“This partnership allows both businesses to gain exposure to new channels and markets as we have different strengths in retail and foodservice in Australia and New Zealand. Sara Lee marked our 50th birthday in June, and Original Foods Baking Co. celebrated its 30 years in the same month, so it seems we have been aligned in our love of baking for many years. Our teams are a natural fit.
“Since 2013, McCain has invested more than A$40 million in Sara Lee’s product innovation and infrastructure to create a successful, well-run business that is prepared for growth and future, so we will look to continue to innovate and maintain our growth journey from day one. I am excited and confident about the future of Sara Lee with Original Foods Baking Co. We will continue to run independently, employing locally and offering customers the same quality range. As such, while we’re not looking for immediate ‘synergies’ — our businesses complement each other perfectly, so we’ll be looking for opportunities to partner for ongoing growth.”
Mr. Mackaness said the Sara Lee plant in Lisarow, New South Wales, was built in 1971 beside orchards, where it used to source oranges for the famous Sara Lee Orange cake. Today, Sara Lee still sources 90% of its ingredients locally, while also employing 220 people from the region.
“The future is bright for Sara Lee,” Mr. Mackaness said. “Uniting two great baking businesses that will work together to grow into Australia and New Zealand’s premier frozen baked goods supplier is genuinely exciting. We will be investing back behind the Sara Lee brand to continue to give Aussie and Kiwi consumers the great classics they love, with a lot of new products to come as well. Importantly, Sara Lee has been very much a sweet part of the Central Coast food manufacturing landscape for 50 years at the Lisarow bakery, and we look forward to this continuing well into the future.”