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Tereos buys UK sugar group as EU shake-up looms

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Shares in Real Good Food soared 47% after the UK group unveiled the sale of its sugar division to French giant Tereos, in a deal attributed to preparations for the 2017 liberalisation of European Union sweeteners rules.

Real Good Food said it had sold its Napier Brown business - which owns the Whitworths brand, with a share of more than 20% of the UK sugar market - to Paris-based Tereos for £34m.

The sale - which follows a difficult period for Napier Brown, including most notably a failed attempt to prompt a competition inquiry into supplier British Sugar – sent Real Good Food shares to a 13-month high of 47p in early deals in London.

The shares in mid-morning deals stood at 40p, a gain of 27% on the day.

"Profound implications"

Real Good Food said that the disposal of Napier Brown represented a reaction to the prospect in 2017 of the end of EU sugar production quotas, a move which "has profound implications" for the region's industry.

Napier Brown "has an important role" in ensuring the imports that the UK needs to meet its needs, after a reduction in volumes at Tate & Lyle has left the market "increasingly in deficit".

"But, in order to operate effectively, [Napier Brown] needs to ensure that cost-effective sources of sugar are available to it," Real Good Food said.

"The directors believe that in the post-quotas era, Napier Brown's interests would be best served by having a direct integration with a sugar producer."

European ambition

For Tereos, meanwhile, which plans to increase its sugar output by around 20% when the European quota system is lifted in 2017, the acquisition offers a fresh outlet for its supplies.

Alexis Duval, the Tereos chief executive, terming the deal a "great opportunity", said that "this acquisition is a new step in our ambition of European development in anticipation of the end of the EU sugar regime in 2017".

The co-operative added that the deal "will significantly reinforce Tereos' positions in the UK, which is a strategic market for French producers".

Tereos, which is the largest sugar producer in France, and the fifth-largest sugar group on the world, processes sugar from beet, cane and cereals, and produces ethanol and starch derivatives.

By Agrimoney.com

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