AB Foods buys sugar unit

Associated British Foods (AB Fooods), the owner of British Sugar, is to buy Ebro Puleva SA’s sugar unit for €385 million, gaining half the market in the Iberian peninsula as EU reforms reduce production

AB Foods, whose other businesses include Twinings teas and Primark retail stores, produces 4 million tonnes of sugar annually under British Sugar, and has sugar operations in the United Kingdom, Poland, China and in a number of countries in southern Africa.
It is making the purchase three years after EU governments agreed to cut minimum prices and compensate farmers to encourage less efficient processors to close. Ebro’s sugar unit, which AB Foods said had some of Europe’s most efficient beet growers, will “permanently renounce” almost half its historic quota from next October and produce at four fewer plants. The companies are considering cooperating in other areas, such as rice, flour, ingredients, and research through Ebro’s Puleva Biotech SA unit. Ebro’s sugar unit had operating profit of €44 million on sales of €586 million last year and the transaction is likely to be complete by March 2009.