Tate & Lyle sale talks turn sour

TATE & Lyle has abandoned £90m sale talks that would have ended its disastrous foray into the US sugar market. A consortium of 3,000 farmers in the Midwest had been attempting to scrape the funds together to buy Tate's poorly-located Western Sugar beet processing factories, but failed to meet today's deadline.

Tate will pursue a sale elsewhere but is likely now to run Western until contracts with farmers run out in 12 months, then liquidate the business.

Heads of agreement were signed with the consortium in 2000 but the talks have dragged on. Tate shares fell 5p to 327p, the slide eased by assurances that loss-making Western would break even this year due to a recovery in the price of sugar.

Last year investors welcomed the disposal of the Domino cane sugar operation, which lost £18m in the six months to the end of September alone.

A new tax on soft drinks in Mexico will lead to reduced profits at Tate's Almex division, but elsewhere current trading for the nine months to 31 December has been in line with the group's expectations.