Tate & Lyle in pounds 63m French deal

Click to follow
The Independent Online
TATE & LYLE, the sugar and sweeteners company, will become the world's second largest producer of monosodium glutamate following a Fr447m ( pounds 63.8m) French acquisition, announced yesterday.

Tate, through its 63 per cent-owned Belgian associate, is paying Fr414m to Lafarge Coppee for a 61.4 per cent stake in Orsan, which produces amino acids and monosodium glutamate from starch and molasses. Tate will also launch a Fr15.5m tender offer for the 18.8 per cent of the shares in public hands.

The remaining shares are held by Ajinomoto, the Japanese food company, which is the leading monosodium glutamate manufacturer. Tate said an outright acquisition by Ajinomoto would probably have been challenged on monopoly grounds.

The buy is the latest in a series of small deals by the group and brings the total spent since September to almost pounds 100m. Neil Shaw, chairman, said the group had five teams considering acquisitions around the world, mainly in Eastern Europe and Asia, where sugar companies may be privatised.

The deal was announced as Tate revealed a 21.6 per cent rise in pre-tax profits to pounds 130.9m for the six months to 26 March on sales 6.6 per cent ahead at pounds 1.9bn. Earnings were held back by a higher tax charge and rose 12.5 per cent to 17.9p, while the dividend is increased from 4.3p to 4.6p.

The profits increase was due to a recovery in the sweeteners and starch businesses, whose contribution rose from pounds 56.4m to pounds 78.6m. The group's Illinois factory is still affected by a lock-out, but it said management and temporary employees were running the plant at a lower cost than before.

The sugar business in the US was affected by a fall in prices following last year's bumper beet harvest. In Britain sugar profits fell from pounds 33.7m to pounds 30.6m, but the previous year's figures were inflated by a pounds 4.6m stock profit.

(Photograph omitted)

Bottom Line, page 38