Tate and Lyle sells historic sugar refining business
Britain's Tate and Lyle is bailing out of the business in which it built its fame and fortune, selling its European sugar operations to a US group on Thursday in order to focus on speciality products.
The British food group decided to break historic links dating back more than 130 years after finding that the sugar refining business, which it once dominated in Europe, is no longer as sweet as it used to be for profits.
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 and 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 and 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 and Sons and Abram Lyle and Sons, merged in 1921 to create Tate and 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 and Lyle had delivered a number of profits warnings owing to a weak dollar which created volatile sugar prices.
Investors welcomed the deal, bidding the company's shares higher despite a broadly weaker market to close up 1.05 percent at 454.4 pence.
"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