Tate & Lyle PLC (“Tate & Lyle”) announced today the realignment of its sucralose agreements with McNeil Nutritionals (a division of McNeil-PPC, Inc., a Johnson & Johnson company) to better position sucralose and the SPLENDA® Brand for future global growth opportunities. In the new agreements, Tate & Lyle will become the sole manufacturer and will be responsible for the world-wide ingredient sales of SPLENDA® Brand sucralose to food and beverage manufacturers. McNeil Nutritionals will retain ownership of the SPLENDA® Brand and have commercial responsibility for the worldwide SPLENDA® Brand retail and food service business. Tate & Lyle will supply McNeil Nutritionals sucralose on an exclusive basis.
This realignment of responsibilities is a natural evolution of the long-term partnership that has nurtured the success of sucralose and the SPLENDA® Brand. The collaborative structure plays to the strengths of each company and ensures that customers, wherever they are, receive enhanced service dedicated to their business sector.
On closing, McNeil Nutritionals will transfer to Tate & Lyle its sucralose manufacturing plant in Alabama and other assets of the ingredients business, including intellectual property, for a net cash consideration of US$134 million (£70 million) subject to working capital adjustments. The net book value of the assets being acquired by Tate & Lyle at 28 December 2003 was US$181 million (£95 million) and the un-audited pro-forma profit before tax generated by those assets in the year ended on that date was US$33 million (£17 million).
The terms for this transaction reflect the realignment of the former agreements together with the two companies' respective investments and contributions to the development of the business to date and that each party will continue to participate in the success of the other's business. Despite significant one-off costs to integrate the ingredients business, the acquisition is expected to be earnings enhancing and to exceed Tate & Lyle’s cost of capital in the first full year of operation by Tate & Lyle. The transaction is subject to clearance under the Hart-Scott-Rodino Anti-Trust Improvement Act in the United States. Both companies expect to conclude this transaction by 2 April 2004.
Iain Ferguson, Chief Executive of Tate & Lyle, said: “Growing the contribution from value added and branded products is a key part of our strategy and acquiring the sucralose ingredients business is another significant step towards achieving this goal. Sucralose is ideally placed to meet consumer demands for reduced calorie options in many categories, including soft drinks, dairy and confectionery. We look forward to offering this impressive product alongside our existing range of food ingredients and sweeteners. “We are pleased that our long-standing relationship with McNeil Nutritionals continues to be developed so that we are each best able to serve our customer base and benefit from the exciting growth opportunities that sucralose and the SPLENDA® Brand offer.”
Brian Perkins, Worldwide Chairman of Consumer Pharmaceuticals & Nutritionals Group, Johnson & Johnson, said: “With the impressive growth of both the retail market for SPLENDA® Brand tabletop products, combined with the recent European Union approval of sucralose, the SPLENDA® Brand Sweetener, this realignment will enable us to better serve our customers around the world. “Most importantly the new realignment will build our SPLENDA® Brand by maximizing global opportunities in retail and food service. McNeil Nutritionals will focus resources on marketing to consumers and healthcare professionals, while Tate & Lyle will provide outstanding supply-side capabilities to the food and beverage industry.”
Sucralose was first patented for use as a sweetener by Tate & Lyle and is the sweetening ingredient in SPLENDA® Brand consumer products in the United States and in the United Kingdom. It is also used to provide sweetness to more than 3,500 foods and beverages worldwide and is poised for dramatic international growth.
