UPDATE 5-JBS may join funds for Sara Lee bid -source

* JBS does not rule out joint bid, source says

* Buyout firms pursued JBS on Sara Lee deal, source says

* Funding for deal not a pressing issue, source says

* JBS interested in Sara Lee’s coffee, meat unit

* Sara Lee shares recoup some of their early losses
(Adds details on JBS, no company comments so far, background
in paragraphs 1, 6-9)

By Roberto Samora

SAO PAULO, Jan 11 (BestGrowthStock) – JBS, the world’s top beef
processor by revenue, could team up with a group of buyout
firms as it seeks alternatives to win control of Sara Lee Corp
(SLE.N: ), a source with knowledge of the plans told Reuters on
Tuesday.

Private equity firms have pursued Sao Paulo-based JBS
(JBSS3.SA: ) since reports about a potential bid for Sara Lee
arose late last year, the source said. No accord over a joint
bid has been reached, said the source, who declined to be
quoted by name because the talks remain private.

Asked whether JBS could join with private equity funds for
the purchase, the source said, “it is certainly an
alternative.”

“They have pursued us, but there are no preferences or
signed commitments at this point,” the person said, adding
that the Brazilian beef company is interested in Sara Lee’s
retail and food service business, which includes coffee and
meats.

Shares of Sara Lee (SLE.N: ) rose more than 2.5 percent on
Monday on reports that a group of private equity firms is
interested in a buyout of its coffee and meat unit.

The group includes Apollo Global Management [APOLO.UL], a
source familiar with the situation said on Sunday.
[ID:nN09218422]

The Wall Street Journal reported earlier in the month that
a consortium of buyout firms also includes Bain Capital and
TPG Capital [TPG.UL].

Sara Lee shares recouped some of their losses. The stock
fell 0.3 percent to $18.16 on Tuesday on the New York Stock
Exchange, after losing as much as 1.6 percent earlier in the
day. The stock gained 17 percent since the start of December.

Voting shares of JBS rose 0.7 percent in Sao Paulo to 7.04
reais. The stock shed about a third of its value in the past
year.

A spokeswoman for Apollo in New York did not have an
immediate comment. The media office of JBS declined to
comment.

Sara Lee, which has a range of business apart from the
retail unit, is valued around $12.5 billion by a number of
analysts, but the source used a valuation of around $11
billion for the company.

Integrating JBS’ U.S. unit and Sara Lee’s coffee and meat
processing business could create value by providing a home for
the trimmings of JBS’s cattle and pig slaughtering operations,
analysts say. The unit could fetch $3.3 billion in a sale,
Credit Suisse wrote in a report last month.

The deal could also help JBS boost its presence in
processed foods, making profit margins more stable. JBS could
further gain by reducing its reliance on commodities and
turning into a key supplier of meats to rival food
processors.

COFFEE — AN OPPORTUNITY

Brazil, the world’s largest producer of coffee, has no key
players in the industry’s processing and roasting sectors.
Sara Lee’s coffee arm offers “an opportunity to a Brazilian
company to have an important position in coffee,” the source
said.

Investors reckon that whether Sara Lee ends up in
Brazilian hands comes down to two potential deal-killers:
funding and time.

JBS is significantly leveraged following more than a dozen
takeovers since 2007. The purchases have catapulted the
company into the big leagues as the world’s top beef producer,
but left it relatively short of cash as it engages in talks to
buy Sara Lee.

The source said funding would not necessarily drag down
the deal.

“It’s quite early to have an idea. This depends on the
type of structure, the percentage of the company that is to be
acquired, if the bid goes for a part or all (of the target
company), if there’s a partner involved,” the source said.

Sara Lee has been considering options such as separating
its meats and drinks businesses, a source familiar with the
matter recently told Reuters.
(Additional reporting and writing by Guillermo Parra-Bernal.
Editing by Robert MacMillan, Dave Zimmerman)