American Sugar Refining is to buy the sugar business of UK food processing company Tate & Lyle for £211 million ($299 million) in cash, it has been announced.
The group said that the proceeds of the deal, which is expected to be completed within the next two months, will be used to reduce its net debt levels.
Tate & Lyle's sugar business has refineries in the UK and Portugal, as well as the factory which makes its famous Golden Syrup in London. The company’s international molasses business will not be part of the transaction and will be sold separately.
The two London plants on the Thames at Silvertown employ 550 workers directly. The deal means that they will change hands for the first time since they were established by Sir Henry Tate and Abram Lyle some 130 years ago. The two rival companies merged to form Tate & Lyle in 1921.
The firm will now concentrate on its industrial food ingredients division, which produces items used in processed foods such as soups and sauces. Last month, it reported a fall in profits and indicated that it might move away from the sugar business.
The company will now be reorganised into three global divisions: specialty food ingredients, including its sucralose artificial sweetener business; bulk ingredients, including corn sweeteners and industrial starches; and sugars. Tate plans to retain Splenda, its sweeteners brand.
American Sugar Refining is the largest cane sugar producer in North America which in 2007 bought Tate & Lyle’s Canadian sugar refining and packing operations. The acquisition of Tate’s sugar business will mark the company’s first significant expansion into Europe. It is thought that the US company will want to acquire a license to use the Tate & Lyle and Golden Syrup brands in the consumer market.
Commenting on the sale, Javed Ahmed, chief executive of Tate & Lyle said: “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. I sincerely thank our employees for their hard work and commitment over the years, and wish them every success in the future.
“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.”
Headquartered in London, Tate & Lyle serves a global market from more than 45 production facilities throughout the Americas, Europe and South East Asia. In the year to 31 March 2010, the company employed 5,666 people in its subsidiaries and joint ventures, with total sales of £3.5 billion (approx. $5.2 billion).
American Sugar Refining Inc. manufactures refined and speciality sugar products in the US. It operates sugar refineries in Yonkers, Baltimore, and New Orleans. The company was founded in 1891 and is headquartered in Yonkers, New York.
