Fitch: Sara Lee outlook stable

Fitch Ratings said it revised Sara Lee Corp.'s outlook to stable from positive and affirmed its long-term issuer default rating, senior unsecured notes and bank credit facility at BBB and its short-term issuer default rating and commercial paper at F2.

The outlook revision follows Sara Lee's announcement that it has received a binding offer from Unilever to acquire a portion of its international household and body care segment for €1.28 billion. The agency said the portion being sold generated 55% of the segment's EBITDA in 2009.

The board has also authorized a $1 billion share repurchase program.

The agency said the outlook revision reflects its expectation that free cash flow is likely to be negative in the near-to-intermediate term due to several factors, including the divestiture to Unilever.

Sara Lee's credit ratings are supported by the diversification of the company's remaining product portfolio, its substantial liquidity and significant operating earnings improvement in its North American businesses, Fitch said.

For the last 12 months ended June 27, Sara Lee's total debt-to-operating EBITDA ratio was 1.9 times.

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