ABF reaches acquisition agreement on Ebro Spanish sugar business

By Caroline Scott-Thomas

- Last updated on GMT

Related tags: Spain, Sugar

Associated British Foods (ABF) has announced that it has reached an agreement with Ebro Puleva for the acquisition of its Spanish sugar business, Azucarera Ebro, for €385 million.

The acquisition marks the end of parent company Ebro Puleva’s involvement in the sugar market, leaving it to concentrate on rice, pasta, functional foods and dairy instead.

Azucarera Ebro is the largest sugar producer in Iberia, supplying half of the 1.6 million tonnes consumed there from its four sugar processing plants in Spain. The company reported pro forma revenue of €586m and profits of €44m for 2007.

According to Julien Hardwick, an analyst at ABN Amro, the deal is not a cheap price on the basis of profits, but it reflects the expected opening of a new cane sugar refinery near Cadiz in southern Spain, which Azucarera Ebro is in the process of building.

ABF is the sole owner of British Sugar and the Spanish company has contracted British Sugar’s African subsidiary, Illovo Sugar, to supply sugar cane for the new facility.

ABF’s chief executive George Weston said: “The business enjoys a leading position in Iberia supported by modern beet factories and a new cane refinery that will benefit from our partnership with Illovo Sugar.”

The European sugar market has been going through a period of reform since 2006, with less competitive sugar processors being offered financial incentives to leave the market. The goal is to reduce the volume of sugar on the EU market by six million tonnes by 2010, thereby improving competitiveness and helping to secure the industry’s long-term future.

“Azucarera Ebro and its growers have enjoyed considerable support from regional governments in recent times and we look forward to working with them in continuing to develop the business and the beet industry,” ​said Weston.

Chairman of Ebro Puleva Antonio Hernandez said: “This transaction is a very positive outcome for local beet growers, the employees of Azucarera Ebro and the Spanish sugar industry.”

The deal is expected to be finalised in early 2009.

Related topics: Commodities, Cocoa & Sugar

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