UPDATE: Tate & Lyle Sells EU Sugar-Refining Operations

1st Jul 2010 07:59

(Adds detail.) By Jonathan Buck Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Tate & Lyle PLC (TATE.LN) Thursday announced the sale of its sugar refining operations in the European Union to American Sugar Refining Inc. for GBP211 million in cash, advancing its strategy to focus on its specialty food ingredients business. The U.K. company also said that it has taken the initial steps to sell its molasses and Vietnamese sugar businesses, the remaining operations within the sugars division. The sugars division will be classified as discontinued in the interim results to Sept. 30. Tate & Lyle will use the proceeds from the sale of its EU sugar refining operations to reduce its net debt, which stood at GBP814 million at March 31. The operations that American Sugar Refining will acquire comprise the cane sugar refineries in London and Lisbon, Portugal, the Lyle's Golden Syrup factory in London, the associated sugar and syrup brands and the Tate & Lyle process technology consulting business. These businesses in the year ended March 31 generated external sales of GBP689 million and made an adjusted operating profit of GBP14 million, after transitional aid of GBP17 million, and had gross assets of GBP374 million. Tate & Lyle has provided privately held American Sugar Refining, of Yonkers, N.Y., with a perpetual world-wide licence to use the Tate & Lyle brand in connection with the retail sale of sugar and in other limited circumstances. The sale excludes historic U.K. pension assets and liabilities and is expected to give rise to a book loss on disposal, before costs, of approximately GBP55 million, subject to exchange-rate movements and the timing of completion. The transaction is expected to be neutral to the group's adjusted earnings per share on total operations in fiscal 2011. This isn't the first time that American Sugar Refining has purchased assets from Tate & Lyle. In 2007, it acquired Tate & Lyle Canada Ltd., also known as Redpath, for GBP132 million. "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," said Chief Executive Javed Ahmed in a statement. "Tate & Lyle's clear priority is to grow its speciality food ingredients business, supported by cash generated from bulk ingredients," he added. "This disposal will enable us to concentrate our resources on delivering our strategic objectives as we focus, fix and grow our business." The company's shares closed Wednesday at 450 pence. They have gained 7.5% in value since the start of 2010. -By Jonathan Buck, Dow Jones Newswires; +44 (0)207 842 9237; [email protected] (END) Dow Jones Newswires July 01, 2010 02:59 ET (06:59 GMT)