Südzucker acquires Saint-Louis Sucre for Euro1.6bn

The German sugar producer Südzucker announced it has agreed to buy Saint-Louis Sucre, the French sugar company, in a deal worth Euro1.6bn including the assumption of debt, reports the Financial Times. This purchase is a shift from Südzucker's strategy to diversify into non-sugar businesses. Südzucker​ is in the final stage of negotiations to sell Schöller, the German ice cream producer to Nestle, the food group giant. According to Theo Spettmann, Südzucker's chairman, Südzucker had realised that it would be difficult to improve its number three position in the European ice cream market, while world market prices for sugar continued to rise and the EU sugar directive assured sales through fixed quotas. In addition, Saint-Louis Sucre's eastern European joint venture with Tate & Lyle, the UK sweeteners group, as well as its 13.8 per cent ownership of Spain's Ebro Puleva will strengthen Südzucker's activities outside Germany. Mr Spettmann claimed the group would finance 56 per cent of the deal through its own resources, and 44 per cent through a bond issue of about E400m. The sale of Schöller, with annual sales of Euro1.35bn, is expected to raise Euro250m. This takeover comes amid a four-way split of Eridania Béghin-Say, the French foods group controlled by Italy's Montedison. It is likely to spark more takeover activity in the sector. Eridania's most profitable business is its sugar unit Béghin-Say, the world's second-largest sugar refiner after Südzucker. Frédéric Rostand, president of Saint-Louis, assured worried farmers that the arrival of a German owner would not prompt major changes for the group. "The transaction will involve neither plant closures nor restructuring,"​ Mr Rostand said. Südzucker had Euro4.7bn in sales in fiscal 2001 on net profit of Euro209m. Saint-Louis Sucre, Europe's sixth-largest sugar producer, generated Euro1bn in sales last year. Source: Financial Times​