The plan was announced on Friday, after takeover bids Sara Lee received were not enough to entice it to sell the company as a whole.

Sara Lee, whose shares fell as much as 2.3 percent in morning trade, said the split should be completed early in 2012 and would include a $3-per-share special dividend, which will be largely funded by the previously announced sale of Sara Lee's North American fresh bread business. The dividend totals $1.92 billion based on the number of shares outstanding in October.

"We have carefully considered various strategic alternatives, including unsolicited indications of interest in the company," said James Crown, Sara Lee chairman. "We believe that the spin-off, plus the one-time special dividend, offers the greatest potential for delivering long-term shareholder value."

Two groups of bidders for the company recently emerged — a private equity consortium led by Apollo Management and one led by Brazil's JBS SA, the world's biggest meat processor. Both failed to win over Sara Lee.

Stifel Nicolaus analyst Christopher Growe said he believes splitting the company in two will make each segment more attractive to suitors and allow for greater focus and efficiency in the businesses which was not possible under its former structure.

"We still believe JBS, for example, will pursue the meat business within North American retail, but the tax-free nature of this spinoff will likely lead to JBS having to wait two years due to the statutory requirements," Growe said in a research note.

Another bid for the company could also still come in before the spinoff.

"Today's action does not preclude a higher bid," said J.P. Morgan analyst Terry Bivens in a research note. He said he believed that Sara Lee could fetch as much as $23 per share in a takeover, versus a $19 per share valuation of the break-up.

Sara Lee said it plans to spin off its North American retail and foodservice business tax-free into a new public company that would retain the Sara Lee name.

That company's largest brands would include Sara Lee desserts, Jimmy Dean sausage, BallPark hot dogs and Hillshire Farm lunch meats. Along with some smaller brands, those operations had about $4.1 billion in 2010 revenue.

The yet-to-be-named other company would include Sara Lee's international beverage and bakery businesses, as well as the North American beverage business. Its brands would include Douwe Egberts and Senseo coffee and Pickwick tea, and would have had 2010 revenue of $4.6 billion, using 2010 foreign exchange rates.

It was not immediately clear where the beverage business, Sara Lee's largest and most profitable, would be headquartered or listed. Sara Lee spokesman Mike Cummins said many details were still being worked through.

Sara Lee named Marcel Smits as chief executive officer. Smits has served as interim CEO since May, when then-CEO Brenda Barnes suffered a stroke. Barnes stepped down last August.

The board named Jan Bennink as executive chairman, succeeding Crown, with responsibility to implement the spin-off.