Napier Brown buys into cane sugar
glucose supplier James Budgett Sugars in a deal announced this week
worth £17.5 million (€26.2m).
The London-based supplier of the Whitworth brand of sugar said the purchase would strengthen its position in light of imminent changes to the European sugar regime.
Reform of Europe's heavily subsidised 35-year-old sugar regime, and which trades sugar at three times the world market price, is expected in 2006. The EU currently spends €1.3 billion in subsidies to its sugar producers.
"It further strengthens our position as the major independent sugar distributor in the UK, positioning us well for the changes in the sugar regime to come," commented Patrick Ridgwell, chairman of Napier Brown.
Profits of sugar and sweetener suppliers in Europe, such as Napier Brown, Associated British Foods, Tate & Lyle and Danisco, which use EU grown sugar beet to make their ingredients, are vulnerable to changes to the regime which could see subsidies slashed. But firms turning to imports of cane will be less exposed. While Budgetts imports refined sugars from other members of the EU, it also uses raw cane sugars from the African, Caribbean and Pacific 'sugar protocol' countries.
"The acquisition cements an important trading link with ED&F Man, one of the world's largest sugar traders," added Ridgwell.
Budgetts, a supplier of sugar since 1857, remained in private ownership until 1980 when it became a wholly owned subsidiary of ED&F Man, a global merchant in agricultural products. In 1989, Irish Sugar, a member of Greencore Group, bought a 33.33 per cent interest in the firm, which reported over €7 million in sales last year.
Under terms of the agreement net assets acquired, including indebtedness, acquired by Napier Brown, 'will not be less than £6.1 million'.
