Tate & Lyle sells MSG to Ajinomoto
non-core or under-performing assets with the announcement this
morning that it has entered into an agreement for the sale of its
monosodium glutamate (MSG)production unit in France to major
Japanese MSG player, Ajinomoto. The sale is conditional on approval
by the competition authorities in a number of countries.
UK sugar group Tate & Lyle continues to divest itself of non-core or under-performing assets with the announcement this morning that it has entered into an agreement for the sale of its monosodium glutamate (MSG)production unit in France to major Japanese MSG player, Ajinomoto. The sale is conditional on approval by the competition authorities in a number of countries.
The transaction will occur through the sale of shares in Orsan, held by ingredients company Amylum France, a subsidiary of Tate & Lyle. These shares represent 80.39 per cent of the issued capital of Orsan (this percentage will rise to 87.68 per cent by the time of completion due to a pre-completion reorganisation of Orsan).
Ajinomoto is currently a minority shareholder with 19.61 per cent of the shares in issue (12.32 per cent by the time of completion). Orsan operates the MSG plant adjacent to the Amylum France wheat processing plant in Nesle. The Orsan and Amylum France operations have been fully segregated so that Amylum France will notbe affected by the sale operationally, although it will continue toprovide utilities, feed stock and other services to Ajinomoto underlong term agreements.
The sale excludes Orsan's 51 per cent shareholding in Orsan Guangzhou Gourmet Powder Company Limited ('Orsan China') which produces MSG in China.
On 31 March 2002, Orsan (excluding Orsan China) had a total netasset value of £42 million (€66m) and losses before tax attributable to these net assets in the 12 months to 31 March 2002 amounted to £6.5 million. In the six months to 30 September 2002, the business broke even. While Tate & Lyle added that the proceeds of the sale will be used to reduce group debt, the anticipated loss on disposal will be £14.5 million (which includes £9.1 million of goodwill previously written off to reserves).
Larry Pillard, Tate & Lyle chief executive, commented: "The disposal is another step in Tate & Lyle's ongoing strategy to divest ofnon-core or under-performing businesses and product lines."
