Tereos confirms interest in Danisco sugar

Denmark-based Danisco announced in March it was looking to sell or spin-off its sugar operations due to a better outlook for the European sugar industry.

This week the media has been speculating on possible buyers as rumours suggest Danisco is leaning towards the selling option.

A spokesperson for Tereos, told FoodNavigator.com today: "We can confirm that Tereos would like to acquire Danisco's sugar division and we are due to submit our final offer in mid-June."

He said the sugar industry is entering a consolidation phase.

Because Danisco controls 7 per cent of the European sugar market, with a majority of its operations in the Scandinavian and Baltic areas where Tereos does not currently operate, Tereos sees it as providing interesting opportunities.

Tereos has sugar operations in Europe and South America and claims to be the leading sugar company in France and the Czech Republic.

It is also a significant European player for starch, alcohol and ethanol.

The spokesperson added that Danisco has not yet declared whether it will definitely opt for selling the business as opposed to the spin off.

Danisco declined to comment, saying it will announce an update on the demerger in its annual report in June.

No one from Nordzucker was available for comment.

Danisco's sugar operations Danisco announced its intention to split off its sugar division from food ingredients in August 2007, but in early September the board voted against the action on the grounds that the sugar industry was still in disarray following the implementation of the new sugar regime in 2006.

It expected to revisit the spin-off plan one or two years down the line, when it anticipated the dust to have settled following the reforms.

However, the outlook for European sugar has improved as the industry has stepped up to the challenge set by the EC, leading Danisco to re-visit its options.

Sugar outlook Sugar reform was introduced in Europe in 2006 to improve competitiveness and market-orientation of the EU sugar sector and guarantee its long term future.

Under the programme, financial incentives are offered to the less competitive producers to leave the market.

The goal is to reduce the volume of sugar on the market by six million tonnes by 2010.

Although a shortfall in anticipated reductions caused the EC to introduce a new package of incentives, last month it announced that a total of 2.5m tonnes of sugar quota had been renounced in connection with the first round of the most recent sugar reforms.

Also earlier this year, the EC warned that a final, non-compensated quota cut of 1.1m tonnes would likely be carried out in 2010/11 if the industry does not announce further cuts under the voluntary scheme.

Danisco announced in late January it would renounce 134,000 tonnes of its sugar quota, bring it to a total of around 967,000 tonnes for the year 2008/9.