Tate & Lyle sells Canadian sugar business

By staff reporter

- Last updated on GMT

Related tags Lyle Canada Value added Tate & lyle

Tate & Lyle's agreement to the sale of its Canadian sugar
refining business represents another move away from the commodity
end of the market.

The UK-based ingredients giant said that the sale of Tate & Lyle Canada (Redpath) to American Sugar Refining would help the company to reduce group debt. On completion, Tate & Lyle will receive a net consideration of £132 million (C$299 million) subject to closing adjustments relating to working capital. "The sale of Redpath marks another important step in focusing Tate & Lyle's business on its value added strategy,"​ said Iain Ferguson, chief executive, Tate & Lyle. Indeed, Tate & Lyle has made a concerted effort to move away from the commodity end of the ingredients market. This follows a challenging year last year, which was not as tough as 2005 when profits fell 79 per cent to 62 million euros. Changes to the EU sugar regime hit the firm hard, and Tate & Lyle has since been working hard to develop a strategy that addresses the new situation. The company has said that it intends to continue to develop its value added food ingredients business through its Global Food Ingredients Group, and expects to supplement its value added business through the acquisition of bolt-on ingredient companies. Redpath operates a cane sugar refinery in Toronto and a packing operation in Niagara Falls, Canada. The sale of Redpath is conditional upon regulatory approvals covering the Canadian competition bureau (anti-trust), foreign investment (Investment Canada Act) and taxation. Tate & Lyle said that it expects these approvals within the next 90 days. In the year to 31 March 2006, Redpath had total sales of £177 million and a profit before interest and exceptional items of £18 million. After adjusting for the mark-to-market gain on inventory and allocated costs, the underlying profit contribution to Tate & Lyle was also £18 million. At 30 September 2006 Redpath had gross assets of £110 million and net operating assets of £84 million.

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