Tate breaks 150-year link with US sale

Tate & Lyle is selling its European sugar operations to American Sugar Refining for £211m, breaking a 150-year link to sugar in favour of low-calorie sweeteners offering faster growth.
By The Newsroom
Published 1st Jul 2010, 22:38 BST
Updated 1st Jul 2010, 22:38 BST

The privately-owned US group is buying Tate's sugar and Golden Syrup business with a perpetual licence to use the Tate & Lyle name, while Tate said yesterday it will focus on its sweeteners such as Splenda and its industrial starches.

The sugar maker's roots go back to 1859 when Henry Tate started refining, then introduced the sugar cube to Britain in 1875, and his legacy lives on after he bequeathed his paintings to form the nucleus of London's Tate Britain gallery.

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Tate's new chief executive Javed Ahmed sparked talk of a sale of its underperforming sugar operations in May when he promised to focus on its sweetener Splenda and corn-based sweeteners and starches largely made in the US.

Analysts welcomed its exit from a low profits business and after it gained a higher than expected price for a commodity business subject to big world sugar price swings.

"We see the move as positive as it offers a cash injection and a move away from commoditised businesses," said analyst Dirk Van Vlaanderen at Jefferies International, while Graham Jones at Panmure Gordon said it was a very welcome move at a good price.

Henry Tate opened his Silvertown refinery on the River Thames in East London during 1878 and joined with Abram Lyle's company in 1921 to form Tate & Lyle after Lyle started producing his Golden Syrup in 1885 close to Tate's refinery. Tate has struggled as Europe's only significant cane sugar refiner in a beet sugar dominated continent and Investec Securities analyst Martin Deboo said he had been happy to even support the closure of a business which made a loss last year if European Union aid is stripped out.

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The Tate businesses being sold include its London-based Silvertown refinery employing around 550 and its syrup plant with around 40 jobs, and also its Portuguese Lisbon refinery employing around 200.

Tate said the proceeds will be used to pay down its 814m debt and the disposal is expected to complete in about two months, and will result in a book loss of about 55m. It is expected to be neutral to the group's earnings per share in its current financial year to March 2011.