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Associated British Foods acquires the leading sugar producer in Iberia

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15 December 2008

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.

Click here to download the powerpoint presentation for this press release.?

Notes to Editors:

  1. Associated British Foods (www.abf.co.uk) is a diversified international food, ingredients and retail group with global sales of £8.2 billion and 96,000 employees. It is listed on the London Stock Exchange with a market capitalisation of £5.2 billion. It operates in 44 countries with significant businesses outside Europe in southern Africa, the US, China and Australia. Its aim is to achieve strong, sustainable positions in markets that offer potential for profitable growth. It strives to achieve this through a combination of growth of existing businesses, the acquisition of complementary new businesses and achievement of high levels of operating efficiency. The group has established a track record of successful value-adding acquisitions including a 51% stake in Illovo Sugar, Africa's largest sugar producer, AB Mauri (its leading international yeast and bakery ingredients business), new stores for Primark and the grocery brands Mazola, Ovaltine, Patak's and Jordans.
  2. British Sugar (www.britishsugar.co.uk) is the second largest sugar producer in the world and has operations in the UK, Poland, China and southern Africa. For the year ended 13 September 2008 revenue was £1.3bn, adjusted operating profit £153m and some 3.9 million tonnes of sugar was produced. British Sugar is the sole processor of UK sugar beet crop, processing seven million tonnes of sugar beet each year to produce over one million tonnes of sugar at its four factories. Its main customers are food and drink manufacturers in the UK and Europe and its retail brands are Silver Spoon and Billington’s. It is building a world-scale bioethanol plant in the UK in partnership with BP and DuPont. British Sugar first entered the Polish market in 1989 and has since developed its presence considerably. It now produces 200,000 tonnes of sugar annually at Glinojeck, Poland’s highest capacity and lowest cost beet factory. In addition it has developed Poland's premier retail sugar brand, become a leader in animal feeds, improved agricultural yields and reduced processing cost through investment and process innovation.
  3. British Sugar entered the Chinese market in 1995 and now has four cane sugar factories with a processing capacity of over 500,000 tonnes of sugar annually. It has dramatically improved agricultural productivity, factory extraction and sugar yields and has developed a direct industrial customer base with its supply of European standard sugar. Last year it formed two new ventures in north-east China with 12 sugar beet factories across the region which produced over 300,000 tonnes of sugar.British Sugar acquired a 51% stake in Illovo Sugar in 2006. Illovo Sugar is Africa’s largest sugar producer with extensive agricultural and processing operations in six countries and it produced 1.8 million tonnes of sugar last year. Zambia, Malawi, Tanzania and Mozambique have been designated Least Developed Countries by the European Commission. Sugar sourced from Illovo’s operations in these countries will have tariff-free access to the EU from October 2009.
  4. Ebro Puleva (www.ebropuleva.com) is a leading Spanish food company with global sales of €2.7 billion and 7,200 employees. It is listed on the Madrid Stock Exchange and operates in 23 countries. It is involved in the manufacture of rice, pasta, sauces and dairy products under a number of well known brands including Puleva®, Brillante®, Panzani®, Ronzoni®, Mahatma® and Minute Rice®.
  5. Azucarera Ebro (www.azucarera.es) is the leading sugar producer in Iberia supplying some 50% of the 1.6 million tonnes consumed. It offers a full range of products including speciality grades and liquid sugar to the industrial and retail sectors. Its retail brand Azucarera is the leading brand in Spain. In addition, Azucarera Ebro has a profitable co-products business that includes animal feed products and molasses. Following its agreement to permanently renounce beet sugar quota the business will process at four beet sugar factories: La Bañeza, Toro and Miranda de Ebro in northern Spain and Guadalete in southern Spain. These modern factories are well invested and supported by a state-of-the-art packaging plant at Benavente which opened in 2006. A refinery to process cane raws is being built beside the sugar factory in Guadalete and is expected to be operational in late 2009. Pro-forma results for the business acquired were revenue of €586m and operating profit of €44m for the year ended 31 December 2007. Net operating assets are estimated to be €342m.
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