Consumer products giant Procter & Gamble is to sell the plant that makes its controversial fat substitute olestra, which never lived up to company expectations, reports Reuters.
Financial terms of the sale of the Cincinnati plant to Twin Rivers Technology, a P&G supplier, were not disclosed. Twin Rivers will supply P&G with enough olestra, which P&G sells under the Olean brand, to meet its obligations to salty-snack makers like PepsiCo's Frito-Lay unit.
P&G will also retain rights to the Olean brand and technology.
Last year, the company provided for the write-down of olestra capacity as part of a larger charge to fix or exit underperforming businesses.
Olestra, used in fat-free chips and crackers, has had a controversial reception since its introduction, because of concerns that it can lead to gastrointestinal discomfort. The Food and Drug Administration allowed olestra to be marketed in the United States in 1996, but the additive faced regulatory problems elsewhere. In 2000, Canada barred its use as a food additive.
P&G has tried to find other uses for olestra, with little success. The company discontinued a test started in 2000 to sell low-fat crackers made with the additive after sales failed to meet expectations.
P&G has also sold off other underperforming or noncore products in the past two years. It has agreed to sell its Crisco shortening business, along with Jif peanut butter, to J.M. Smucker.
P&G shares closed up $2.50, or 3 percent, at $85.60 Friday on the New York Stock Exchange.