Tate & Lyle completes sale of Canadian sugar business
sale of its Canadian sugar refining business, as the firm makes
another step away from the commodity end of the market.
An agreement for the sale of Tate & Lyle Canada (Redpath) to American Sugar Refining was announced in February this year. Tate & Lyle will receive a net consideration for Redpath of £131m (C$298m, US$178m), subject to closing adjustments relating to working capital. The firm said it will use this amount to reduce group debt. "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 €62m ($84m). 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. In the year to 31 March 2006, Redpath had total sales of £177m ($240m) and a profit before interest and exceptional items of £18m ($24m). After adjusting for the mark-to-market gain on inventory and allocated costs, the underlying profit contribution to Tate & Lyle was also £18m ($24m). At 30 September 2006 Redpath had gross assets of £110m ($149m) and net operating assets of £84m ($114m).
