Associated British Foods plc ("ABF"), the international food, ingredients and retail group, has today announced that it has reached agreement with Ebro Puleva S.A. (“Ebro Puleva”) to acquire its Spanish sugar business, Azucarera Ebro S.L. (“Azucarera Ebro”), for a value of €385m. Completion of the transaction is subject to regulatory approval and is likely to occur in early 2009.
The consideration will be in cash with €20m of the payment deferred over two years. Pro-forma results for the business acquired were revenue of €586m and operating profit of €44m for the year ended 31 December 2007. The value of the gross assets acquired as at 31 August 2008 was €536m and net operating assets are estimated to be €342m. The acquisition is expected to be earnings accretive for ABF in the 2010 financial year.
Azucarera Ebro is the leading sugar producer in Iberia supplying some 50% of the 1.6 million tonnes of sugar consumed. Historically the business processed sugar from eight beet factories and had a beet quota of 741,000 tonnes. Following its agreement to permanently renounce 363,000 tonnes of quota from October 2009 it will process at three factories in northern Spain and a factory at Guadalete in southern Spain. To supplement the reduced beet quota of 378,000 tonnes a cane refinery is being built at Guadalete, which is near the port of Cadiz. It will have a capacity of 400,000 tonnes of sugar and is expected to be operational in late 2009. The refinery will process cane raws, sourced from Least Developed Countries with tariff-free access to the EU from October 2009, which will be supplied mainly by Illovo Sugar.
British Sugar is the second largest sugar producer in the world with production last year of some 3.9 million tonnes. It has extensive operations in the UK, Poland, China and southern Africa. It has proven expertise in improving agricultural productivity and processing efficiencies and in the development of sugar products, for the industrial and retail sectors, and valuable co-products.
Azucarera Ebro will strengthen the existing EU operations of British Sugar. The Spanish management team has already demonstrated an excellent track record of improvement in the business. It has four well-invested beet sugar factories, a state-of-the-art packaging centre and a new refinery is being built. The productivity of the beet growers is amongst the best in Europe and has benefited from investment in agricultural infrastructure, particularly irrigation, with the support of central and regional governments. It has the leading position in Iberia with a full range of products, well established customer relationships and strong retail brands.
British Sugar will work with the local management team to develop the business further. It is expected that Azucarera Ebro will benefit from British Sugar’s expertise in improving processing efficiencies and the development of co-products. Furthermore, the supply capability from Illovo Sugar will be critical to the success of the Guadalete refinery.
Antonio Hernandez, Chairman of Ebro Puleva, said:
“British Sugar, backed by the strength of Associated British Foods, will be an excellent partner for Azucarera Ebro. This transaction is a very positive outcome for local beet growers, the employees of Azucarera Ebro and the Spanish sugar industry."
George Weston, Chief Executive of Associated British Foods, said:
"The acquisition of Azucarera Ebro is an exciting development for British Sugar. The business enjoys a leading position in Iberia supported by modern beet factories and a new cane refinery that will benefit from our partnership with Illovo Sugar. Azucarera Ebro and its growers have enjoyed considerable support from regional governments in recent times and we look forward to working with them in continuing to develop the business and the beet industry"
For further information please contact:
Associated British Foods
John Bason, Head of External Affairs Tel:020 7399 6500
Citigate Dewe Rogerson
Jonathan Clare, Chris Barrie, Hannah Seward Tel:020 7638 9571
A conference call for analysts will take place at 9.00am (GMT) on +44 203 003 2666, PIN number 15128. Slides for the conference call will be available on the company website, www.abf.co.uk.
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