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July 1, 2010, 5:41 a.m. EDT

Tate & Lyle Sells EU Sugar-Refining Operations

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By Jonathan Buck

LONDON—Tate & Lyle /zigman2/quotes/205109332/delayed UK:TATE -0.38% PLC on Thursday announced the sale of its sugar-refining operations in the European Union to American Sugar Refining Inc. for £211 million ($315 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 £814 million at March 31.

The operations that American Sugar Refining will acquire comprise the cane-sugar refineries in London and Lisbon, Lyle's Golden Syrup factory in London, the associated sugar and syrup brands and the Tate & Lyle process technology consulting business.

In the year ended March 31, these businesses generated external sales of £689 million and made an adjusted operating profit of £14 million, after transitional aid of £17 million, and had gross assets of £374 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 trigger 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 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 £132 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."

Write to Jonathan Buck at Jonathan.Buck@dowjones.com

UK : U.K.: London
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