Spanish Sugar Giant Sold

One of the Spanish baking industry’s biggest suppliers, sugar producer Azucarera Ebro, is being sold to British Sugar, part of the Associated British Foods (ABF) group, for €385 million.

The deal, expected to be finalised early in the first quarter of the New Year, will give British Sugar more than half of the Spanish sugar market and help close the gap with its nearest rivals in Europe, Sudzucker and Nordzucker.

Ebro Puleva, the Spanish owners of Azucarera, have been looking to offload the sugar manufacturer in an effort to reduce debt levels that stood at more than €1.2 billion in September and to concentrate on their other main product lines, rice, pasta and milk.

The Spanish acquisition will add around an extra 20 per cent to the annual four million tonne production of British Sugar, which in recent years had been gearing its expansion to countries such as China and South Africa rather than Europe as it has grown to become the second biggest producer in the world.

Ebro Puleva became one of Spain’s leading food groups in 2001 when Azucarera Ebro, which can trace its roots back to early sugar production in 1903, merged with Puleva, best known in the country for its packaged milk.

The group will receive a further €141 million from the European Commission that had been set up as compensation for costs involved in restructuring the sugar sector of its business.

Earlier this year Azucarera signed a deal to supply British Sugar subsidiary Illovo from a new plant at Guadelete near Cadiz.

Rival bids were lodged by Sudzucker and another British group ED & F Man for Azucarera which registered a 7.8 per cent drop in sales to €602.9 million in the first nine months of 2008 compared with the previous year.