Historic British sugar firm Tate & Lyle sold to US

Jul 2 2010 by Iain Laing, The Journal

TATE & Lyle is to sever historic links with the sugar industry stretching back more than 130 years after agreeing to sell its European refining business to a US firm.

The £211m sale to American Sugar Refining (ASR) includes Tate’s Golden Syrup factory in London and a perpetual worldwide licence to use the famous brand name.

The fall of another well-known British business into foreign ownership comes months after Dairy Milk maker Cadbury was bought by Kraft.

Chief executive Javed Ahmed said sugar refining had “a long and proud history“ in the firm, but the company was now focusing on higher-margin products such as sweeteners, starch and ethanol.

Tate & Lyle’s sugars business traces its roots back to 1878 when the Thames refinery opened in Silvertown, East London, by founder Henry Tate after he bought up the rights to the newly invented sugar cube.

Abram Lyle, who opened his own refinery in nearby Plaistow in 1883, first began putting Golden Syrup into its famous green and gold tins in 1885 after it proved an instant success with customers. The syrup is made from by-products in the sugar refining process.

The two firms merged in 1921 to form Tate & Lyle, refining about 50% of the country’s sugar between them. It was a founder member of the FT-30 Index and is one of only two of the original companies still listed today.

ASR is adding the European operations to the US and Canadian refining businesses it bought in 2001 and 2007. A spokesman said there would be no job losses as a result of the deal.

Co-president Luis Fernandez said: “Tate & Lyle is steeped in 130 years of tradition and consumer loyalty. We recognise the importance and history of the Tate & Lyle sugar brand and are proud to add it to our existing brand portfolio.”

Tate & Lyle has endured a run of profits warnings in recent years due to factors such as the weak US dollar, lower sugar prices after EU reforms and higher European corn costs.

It has concentrated on its “value added business” which includes ingredients for food such as soups, sauces and dressings.

The businesses falling into US hands – which include its operations in Portugal and a consulting arm – generated revenues of £689m in the year to March and underlying profits of £14m, employing around 700 staff.

The firm, which will be left with a loss of £55m on the sale, plans to use the proceeds to help reduce its net debts, which were £814m at the end of March.

Investec analyst Martin Deboo said: “We can’t avoid the pun that this looks like a very sweet deal for us.”

He added: “We also think this is the right deal strategically. Our view has been that cane sugar refining in the EU is a challenged business model and we think that Tate should be able to find better uses for the cash.”

Following the sale, the firm’s UK presence will be based around a small food stabilisers business in Mold, Flintshire, and its London head office.