Dutch ingredients producer CSM is poised to sell its lucrative sugar business to Royal Cosun in an effort to streamline their bakery portfolio and strengthen growth in pivotal areas.
The CSM Sugar Division will be handed over in the fourth quarter of 2006 for a provisional price of €202m.
News of the sale follows CSM's February announcement that it was looking to jettison its sugar business in order to sharpen business focus and strengthen its position in the bakery ingredients and products arena as well as the lactic acid and lactic acid derivatives sectors.
Both sites at the Netherlands-based sugar company will be sold to Cosun subsidiary, Suiker Unie. The facility at Vierverlaten extracts sugar from beet, processing around 18,500 tons of beet per day while the second plant, Breda, which has a research laboratory onsite, manufacturers speciality sugars such as liquid and soft brown sugars and syrup.
CSM Sugar has an annual turnover of around €250m and produces and sells 350,000 to 380,000 tons of sugar each year.
Chief executive officer of CSM, Gerard Hoetmer, said: "The merger between CSM Sugar and Cosun represents a major joining of forces and a reinforcement of the entire chain. It secures the continuity of the Dutch sugar sector in the rapidly changing European sugar market, also in the longer term."
Royal Cosun hope that, by combining resources with CSM, they will reduce the effect of the 36 per cent price cuts implemented in the reforms and lower cost price.
Sale of the CSM sugar division comes in the wake of a year of restructuring for CSM, which has an annual turnover of around €2.6bn and a workforce of 8,500.
In May it divulged plans to spend €19m on expansion of its American-style bakery lines - German subsidiary BakeMark Deutschland, who produce frozen bakery goods, were given the investment in order to target key European markets by early 2007.
An additional factor influencing the sale was the predicted impact of EU sugar reforms, which came into force this month and sent producers scurrying to stabilise their businesses for an industry that will become more competitive as a result of the new legislation.