Tate & Lyle sells historic sugar refining unit to US firm
British food group Tate & Lyle on Thursday agreed to sell its European sugar refining unit to American Sugar Refining Inc, breaking historic links that date back more than 130 years.
Tate said in a statement that it signed a deal to sell its EU Sugar Refining operations (EUS) to American Sugar Refining (ASR) for 211 million pounds (257 million euros, 314 million dollars) to focus on speciality food products.
"Sugar refining has enjoyed a long and proud history within Tate & Lyle, but we believe the interests of this business and its employees are now best served by being part of a company for whom sugar refining is core," chief executive Javed Ahmed said in a company statement.
"Tate & Lyle's clear priority is to grow its speciality food ingredients business, supported by cash generated from bulk ingredients.
"This disposal will enable us to concentrate our resources on delivering our strategic objectives as we focus, fix and grow our business."
Tate's EUS unit includes cane sugar refineries in London and Lisbon, the Lyle's Golden Syrup factory in London, associated sugar and syrup brands, and the Tate & Lyle Process Technology consulting business.
The group's history dates back to 1878, when the Thames sugar refinery was opened in Silvertown, east London, by the group's founder Henry Tate, who bought the rights to sugar cube technology and introduced it to Britain.
Abram Lyle then opened his own refinery in Plaistow, London, in 1883, finding huge success with the Golden Syrup brand.
The two rival groups, Henry Tate & Sons and Abram Lyle & Sons, merged in 1921 to create Tate & Lyle.
Currently, two-thirds of the British group's profits stem from higher-margin products like sweeteners, starches and ethanol.
ASR will bring together Tate's European sugar refining unit with the US and Canadian refining businesses that it purchased in 2001 and 2007. A spokesman added that there would be no job losses.
In recent years, Tate & Lyle had delivered a number of profits warnings owing to a weak dollar which created volatile sugar prices.
In reaction to the deal, Tate shares rose 2.0 percent in afternoon deals on the London stock market.
"We can't avoid the pun that this looks like a very sweet deal for us," said Investec analyst Martin Deboo.
"We also think this is the right deal strategically. Our view has been that cane sugar refining in the EU is a challenged business model and we think that Tate should be able to find better uses for the cash."
© 2010 AFP