Tate & Lyle profit warning prompts Chinese takeover speculation
The company has seen prices for its Splenda sugar substitute fall by 15%
Shares in Tate & Lyle crashed 16 per cent in early trading after the sweetener-maker warned on profits, triggering City speculation of a potential Chinese takeover bid.
The food ingredients business blamed weak sales in developed markets, where lower fizzy drinks sales have hit demand for sweeteners, as well as warning of a dramatic 15 per cent fall in prices for Splenda, its sugar substitute which is struggling due to a glut of cheaper generic rivals from China.
Tate & Lyle, which sold its historic sugar business to American Sugar Refining for £211 million in 2010, said it had recently renewed a number of customer contracts, but deals had been struck in a “competitive environment, driven we believe by a significant overhang of unsold Chinese sucralose”.
City sources said those competitor producers could be interested in buying up Tate.
Chinese buy-out firms have also been swirling the capital looking for deals. Bright Food, the Chinese company that snapped up a majority stake in Weetabix in 2012, is on the acquisition trail in Europe, with vice-president Ge Junjie visiting London as part of the state-controlled firm’s ambition to double its international presence to 25 per cent within the next three years.
"When you see Tate’s share price fall, people are going to see it as an opportunity,” said one food analyst. “The Chinese are one possibility, although they have typically been buying brands, and Tate is an ingredients business."
Shares in the company plunged 127.5p to 659p after Tate said its profit for the year to April will be in line with last year, when it posted a £329 million profit — the City had been expecting closer to £340 million.
"There’s been a number of concerns hanging around Tate, including the threat of generic competition from China, ongoing weakness in the North American sweetener market, and continued reduction in carbonated soft drinks,” said Darren Shirley, analyst at Shore Capital. “Now it seems that some of the threats hanging over the company have all come to fruition."
- 1 British tourists 'murdered' in Thailand: Pair's bloodied bodies found naked on Koh Tao beach
- 2 Vivienne Westwood says 'Yes' to Scottish Independence by declaring: 'I hate England'
- 3 Welcome to Cameroon, where drinking Baileys can lead to imprisonment
- 4 Lego breaks out of the toy box and heads for the gallery
- 5 Vogue under fire for 'Big Booty' article
Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
The political class is doing what Hitler couldn’t – destroying Britain
Scottish independence: Nationalist leader Jim Sillars threatens pro-union companies with 'day of reckoning' after independence
Scottish independence: Yes campaign feels the heat as Alex Salmond's NHS claims come under furious attack
£23m Birmingham cycle scheme is attacked by Tory councillor for not catering to the elderly
Salmond accused of laughing off national debt with ‘what are they going to do: invade?’ joke
iJobs Money & Business
£280 - £320 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...
£35000 - £38000 per annum + Benefits: Ashdown Group: Training Coordinator / Pl...
Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)
£400 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...