Tate & Lyle completes US retreat

TATE & Lyle has finally struck a deal to sell its loss making Western Sugar Company operations to a huge US farmers' co-operative for $85m (£58m) after more than a year of negotiations. The two sides signed a preliminary memorandum of understanding in October 2000, but talks dragged on as the 3,000-strong co-operative struggled to raise the funds.

Talks were officially abandoned in January after the Rocky Mountain Sugar Growers Co-operative failed to meet the sale deadline, but negotiations continued behind the scenes.

Tate has agreed to a long term hire purchase-style financing package, whereby it receives $24m in cash and the remainder over the following five years. It booked a loss on the sale of £86m in last year's accounts.

'This brings to an end what has been a bit of a saga,' said Investec analyst Michael Landymore.

The sale means Tate & Lyle has withdrawn from its ill-advised move into the US sugar market during the 1980s. The operations have been blighted by a collapse in prices and excess capacity. Last summer, it sold the bigger Domino sugar business for £113m, also including a five-year deferred payment agreement.

However, it still has a sizeable Canadian operation, Redpath, which analysts are expecting to see sold by 2004.

Western Sugar owns six beet factories in Nebraska, Wyoming, Colorado and Montana. Tate & Lyle is also seeking bidders for its North American molasses businesses, which had sales last year of £400m.