Tate & Lyle agrees sale of molasses business

By Jess Halliday

- Last updated on GMT

Related tags: European union, Tate & lyle

Tate & Lyle has agreed the sale of its molasses business to W&R Barnett for £67 million cash, a deal that is consistent with its strategy to dispose of its bulk ingredient operations and focus instead on specialty ingredients.

News of the sale comes as no surprise as the company said in its six month financial report, published at the start of November, that the discussions over the molasses business were on track. Discussions are also on-going over the sale of Vietnamese sugar, and at the end of September the EU sugar operations to American Sugar Refining, Inc for £212m at the end of September.

Javed Ahmed, chief executive of Tate & Lyle, said: “Tate & Lyle’s clear priority is to grow its Speciality Food Ingredients business, supported by cash generated from Bulk Ingredients. This disposal represents another important step as we focus, fix and grow our business.”

Proceeds of the sale will be used to reduce net debt, standing at £540 million at 30 September 2010 (it has been reduced by £274 million, or 34%, since 31 March 2010). The deal is expected to close within the next few weeks, but Tate & Lyle says it is subject to employee consultation.

The molasses business is made up of the global molasses trading desk based in London, UK and other worldwide marketing operations together with the UK third party storage operations. These businesses had external sales of £228 million and made an operating profit of £13 million in the year to 31 March 2010, and had gross assets of £81 million at that date. Excluded are the historic pension assets and liabilities.

In October Tate & Lyle announced plans to establish a new commercial and food innovation centre in Chicago, while plans for a bulk ingredients facility in Fort Dodge, Iowa, have been mothballed.

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