Tate & Lyle to Sell European Starch Operation
Tate & Lyle said that the move comes as a result of the EU’s adoption of a new regulatory regime for the sugar industry which took effect on 1 July 2006.
26/10/06 Tate & Lyle has said that following a review of its plans for the future of its Food & Industrial Ingredients (TALFIIE), Europe division it has concluded that ownership of the business is no longer an essential element of its strategy to focus on value added ingredients such as Splenda brand sucralose. Tate & Lyle is therefore exploring the possibility of the full or partial disposal of TALFIIE. Analysts at UBS said that a full disposal of its food and industrial ingredients business might fetch about £300 million, while other analysts said that potential buyers such as Cargill might come across antitrust problems.
Tate & Lyle said that the move comes as a result of the EU’s adoption of a new regulatory regime for the sugar industry which took effect on 1 July 2006. The new regime aims to cut EU sugar support by 36 per cent to bring it more in line with world sugar prices. Tate & Lyle said that it believes that the interests of TALFIIE and its employees may be best served by the transfer of all or part of the business to an owner whose objectives and strategy are more closely aligned with the business and its investment opportunities.
Tate & Lyle said that it will continue to develop its value added food ingredients business in Europe through its Global Food Ingredients Group, which includes Cesalpinia Foods Srl. As previously advised, Tate & Lyle will continue to seek to supplement its value added business through the further acquisition of bolt-on ingredient companies.
Iain Ferguson, Chief Executive of Tate & Lyle said "The decision to explore a full or partial disposal of Food & Industrial Ingredients, Europe is in response to the consequences of far reaching reform to the EU sugar regime and builds on the recently announced consultation on the surrender of quota in our Eastern Sugar joint venture. Today’s announcement reflects our strategic commitment to focus on growing our value added ingredients business.” Tate & Lyle will reveal its half-year results to the end of September next week. It expects a modest decline in profitability but then to see a significant decline in its second half to March 2007.
