UK sweeteners and starch group Tate & Lyle has completed the sale of its monosodium glutamate (MSG) production unit in France to Japanese seasonings company Ajinomoto.
When announced at the end of last year, Tate & Lyle said that the proceeds of the sale would be used to reduce group debt. The anticipated loss on disposal will be £14.5 million (€20.7m), including £9.1 million of goodwill previously written off to reserves.
"The disposal is another step in Tate & Lyle's ongoing strategy to divest of non-core or underperforming businesses and product lines," said Larry Pillard, chief executive of Tate & Lyle, when the sale was announced last year.
The transaction will be the sale of the shares in Orsan, held by Amylum France, a subsidiary of Tate & Lyle.
These shares represent 80.39 per cent of the issued capital of Orsan (this percentage will rise to 87.68 per cent by the time of completion due to a pre-completion reorganisation of Orsan).
Ajinomoto is the minority shareholder with 12.32 per cent by the time of completion. Orsan operates the MSG plant adjacent to the Amylum France wheat processing plant in Nesle.
The Orsan and Amylum France operations have been fully segregated so Amylum France will not be affected by the sale operationally, although it will continue to provide utilities, feed stock and other services to Ajinomoto under long term agreements.
The sale excludes Orsan's 51 per cent shareholding in Orsan Guangzhou Gourmet Powder Company which produces MSG in China.
At 31 March 2002, Orsan had a total net asset value of £42 million and losses before tax attributable to these net assets amounted to £6.5 million. In the six months to 30 September 2002, the business broke even.
At the Annual General Meeting of Tate & Lyle in London yesterday, Sir David Lees, Chairman, told shareholders that there has been little overall change in trading conditions or in the outlook since the beginning of June, confirming that results for the first quarter were very much in line with the company's expectations.