Tate & Lyle takes major step to focus business through sale of EU Sugar operations
Tate Lyle PLC (“Tate Lyle”) announces today it has signed an agreement for the sale of its EU Sugar Refining operations (“EUS”) to American Sugar Refining, Inc. The consideration is £211 million payable in cash, subject to closing adjustments for net cash and working capital, with the proceeds used to reduce Tate Lyle’s net debt1.
On 27 May 2010, Tate Lyle announced its clear intentions to focus, fix and grow its business. Today’s announcement is fully consistent with those intentions and will result in a more focused, less volatile business, and a solid platform to deliver sustainable long-term growth in Speciality Food Ingredients, supported by cash generated from Bulk Ingredients.
EUS consists of the cane sugar refineries in London, UK, and Lisbon, Portugal, the Lyle’s Golden Syrup factory in London, UK, the associated sugar and syrup brands and the Tate Lyle Process Technology consulting business. In the year ended 31 March 2010, these businesses had external sales of £689 million and made an adjusted2 operating profit of £14 million (after transitional aid of £17 million), and had gross assets of £374 million at 31 March 2010. The sale excludes historic UK pension assets and liabilities and is expected to give rise to a book loss on disposal, before costs, of approximately £55 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 the 2011 financial year.
The completion of the transaction, which is conditional upon anti-trust clearance in Portugal, is expected to occur in approximately two months. Payment of £5 million of the consideration is contingent on the transfer of certain joint venture shareholdings that are subject to pre-emption rights held by the other shareholders.
Tate Lyle has provided American Sugar Refining, Inc. with a perpetual worldwide licence to use the Tate Lyle brand in connection with the retail sale of sugar and in other limited circumstances.
Tate Lyle also announces the launch of processes to sell the remaining businesses within the Sugars division, principally Molasses and Vietnamese sugar.
The Sugars division will be classified as discontinued in the Interim Results to 30 September 2010.
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.”
Note 1 Net debt at 31 March 2010 was £814 million.
Note 2 Excluding exceptional items and amortisation of acquired intangibles.
END
Tate Lyle operates through two global business units, Speciality Food Ingredients and Bulk Ingredients, supported by Innovation and Commercial Development. The Group's strategy is to become the leading global provider of Speciality Food Ingredients through a disciplined focus on growth, and by driving the Bulk Ingredients business for sustained cash generation to fuel this growth.
Speciality Food Ingredients include starch-based speciality ingredients (corn-based speciality starches, sweeteners and fibres), no calorie sweeteners (including SPLENDA® Sucralose) and Food Systems which provides blended ingredient solutions. Bulk Ingredients include corn-based bulk sweeteners, industrial starches and fermentation products (primarily acidulants). The co-products from both divisions are primarily sold as animal feed.
Tate Lyle is listed on the London Stock Exchange under the symbol TATE.L. American Depositary Receipts trade under TATYY. In the year to 31 March 2013, Tate Lyle sales totalled £3.3 billion. http://www.tateandlyle.com. SPLENDA® is a trademark of McNeil Nutritionals, LLC
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