Chock full o'Bucks, Sara Lee Tries Another Coffee Fast Break

Sara Lee Corp., the $20 million-a-year consumer packaged goods parent of foodservice-leader Superior Coffee, is once again making a financial fast-break to acquire Chock full o'Nuts Corp. But the famous cake-maker "nobody doesn't like" is having a hard time slam-dunking into Chock's coffers.

Sara Lee on May 4 made a cash tender offer to purchase all outstanding shares of Chock full o'Nuts Corp. for $10.50 per share, all of its outstanding 7% convertible senior subordinated debentures due 2012 for $1,275.82 per $1,000 bond and all of its 8% convertible senior subordinated debentures due 2006 for $1,344.43 per $1,000 bond.

Because the board of directors rejected the offer, Sara Lee president and CEO Steven McMillan announced the company is now inviting security holders of Chock full o'Nuts "to tender their securities and to express their views on the merits of our offer to their board of directors. We believe that security holders will find our offer attractive, particularly in light of the company's historical operating and stock price performance."

He added that the company and its takeover defenses are "standing in the way of its stockholders receiving $10.50 per share in cash. We continue to be hopeful that the directors of Chock full o'Nuts will ultimately recognize the benefits of a transaction on the terms that we have proposed."

Watch out, Darth Vader. The $10.50 tender offer price represents a 65% premium to Chock full o'Nuts' closing stock price of $6.38 on April 22, 1999, the last trading day prior to Sara Lee's Schedule 13D filing with the Securities and Exchange Commission.

The tender offer is subject to conditions including the tender of shares and bonds resulting in Sara Lee holding securities representing 2/3 of the shares outstanding on a fully diluted basis, the board of Chock full o'Nuts having redeemed or otherwise rendered its stockholder rights plan inapplicable, the board having rendered the New York business combination statute inapplicable to the offer and expiration of the anti-trust waiting period. The complete terms and conditions of the offer will be set forth in Sara Lee's Offer to Purchase that will be mailed to Chock full o'Nuts security holders beginning next week.

Sara Lee previously disclosed its interest in acquiring Chock full o'Nuts Corporation in its filing on Schedule 13D with the Securities and Exchange Commission on April 22, 1999. At that time, Sara Lee indicated that it had purchased Chock full o'Nuts securities equivalent to 598,328 shares of common stock. Sara Lee also disclosed that it has made proposals to the board of directors of Chock full o'Nuts to acquire the company that have been rejected.

If the deal goes down, Chock full o'Nuts will be managed by Sara Lee's Superior Coffee division, a leading foodservice supplier servicing independent restaurants and regional and national chains, hotels hospitals and universities. Superior markets its products under the Superior, Douwe Egberts, Continental, Metropolitan, Java Coast, McGarvey and Paradise Tropical Tea brand names. Sara Lee Corporation's Coffee and Tea line of business is managed by Sara Lee/DE, the Netherlands-based subsidiary of Sara Lee that also oversees the company's Household and Body Care line of business.

Sara Lee Corp.'s consumer packaged goods company with more than. Its leading brands include Sara Lee, Douwe Egberts, Hillshire Farm, Hanes, Coach, and Playtex.