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Tate & Lyle to exit Europe corn-syrup business

Staff writer ▼ | April 22, 2015
Tate & Lyle announces the exit from the substantial part of its European Bulk Ingredients business and the re-structuring of its Splenda Sucralose business to further focus on and strengthen Speciality Food Ingredients.
Tate & Lyle
Cleaning portfolio   Re-structuring of Splenda Sucralose business
Tate & Lyle signs an agreement with ADM to re-align their Eaststarch corn wet milling joint venture in Europe. Under the re-alignment, Tate & Lyle plans to:

Strengthen its Speciality Food Ingredients business by acquiring full ownership of the more speciality-focused plant in Slovakia
Substantially reduce its European Bulk Ingredients footprint by exiting the predominantly Bulk Ingredients plants in Bulgaria, Turkey and Hungary
Receive €240 million in cash on completion of the transaction

As a result of the re-alignment:
Tate & Lyle will substantially exit from bulk sweeteners in Europe for good value and before a decision on potential future capital investment is required arising from the reform of the EU Sugar Regime in 2017
Proportion of Group adjusted operating profit from Speciality Food Ingredients will increase from 50% to around 55%, and in Europe will effectively become all of the profit

Splenda Sucralose business is to pursue a rigorous value-based strategy and future cost base to be materially lower by consolidating all Splenda Sucralose production into company's facility in Alabama, US and closing the Singapore facility in Spring 2016. Splenda Sucralose business is expected to be around breakeven in the year ending March 31, 2016 and to return to modest profitability in the year ending March 31, 2017.

Receipt of €240 million in cash on completion of the transaction, is expected in the summer. The financial impact on the group’s results of the Eaststarch re-alignment is as follows:
Had the transaction taken effect from 1 April 2014, a reduction of £32 million in Group adjusted operating profit in the year ended 31 March 2015
Depending on the timing of completion and final transition arrangements, a somewhat lower impact on Group earnings in the year ending 31 March 2016
Earnings dilution from the start of the year ending 31 March 2017 of around 3p per share
Net exceptional items of around £125 million representing a profit on disposal of around £60 million, and exceptional charges of around £185 million (up to £65 million is cash)

The board intends to recommend an unchanged final dividend for the year ended 31 March 2015 of 19.8p to make a total for the year of 28.0p, an increase of 1.4%. Further, the board intends to maintain the total dividend payment at 28.0p for ‎the year ending 31 March 2016.