P&G to buy Sara Lee's air freshener business

NEW YORK (Reuters) - Procter & Gamble Co (PG.N) struck a deal to buy Sara Lee (SLE.N) unit Ambi Pur for $470 million to expand its portfolio of air freshener products and broaden its presence in Europe and Asia.

The deal will allow Sara Lee to focus on its core food and beverage businesses as it divests parts of its international household and personal care unit that sell disparate products ranging from air freshener to shoe polish.

Sara Lee said the P&G deal and a previous pact with Unilever Plc (ULVR.L) for its global body care and European detergents business will together yield proceeds of $2.36 billion.

It said it continues to receive strong interest in the remainder of its household businesses, including shoe polishes and insecticides.

Ambi Pur had sales of $355 million in the year ended in June. It will bring products such as car air fresheners, toilet disinfectants and battery-powered air fresheners to P&G.

P&G said it does not expect the deal to have a material impact on its fiscal 2010 results and sees it closing in the current fiscal year, which ends on June 30.

"The proposed sale of our air care business is the next step in our plan to focus on our core food and beverage businesses, where we have a strong competitive position and can generate superior shareholder returns," Sara Lee Chief Executive Brenda Barnes said.

On Thursday, a former Sara Lee executive and industry analyst told Reuters that it would be wise for the company to consider a spin-off that would strip out fixed liabilities from recent divestitures and rebase its existing operations, like coffee and baked goods, outside the United States.

P&G shares were up 0.9 percent at $62.81 and Sara Lee's stock was up 0.4 percent at $12.24 in morning trade on the New York Stock Exchange.

(Reporting by Dhanya Skariachan, editing by Gerald E. McCormick and John Wallace)