9 June 2008 – The possible acquisition of Danisco Sugar A/S by Tereos, France's leading sugar producer, would allow the French group to challenge European leader Sudzücker, Tereos CEO Philippe Duval said in an interview.
Tereos is about to present Danisco with a firm offer for its sugar division, Mr Duval said. The French company and rival Nordzucker are the sole remaining contenders in the race for the Danish group’s sugar operation, as reported by FLEXNEWS at the end of May.
Should Tereo’s offer be accepted, the French group’s share of the European sugar market would rise from its current 11% to 18%. The acquisition would allow Tereos to pull away from rivals Nordzucker and British Sugar and take it closer to Südzucker, the current undisputed leader with a 23% share of the market.
Tereos intends to finance a possible acquisition through private investors in the first instance. The group would then list in the stock exchange, within three to five years, which would allow private investors to exit Tereos should they wish to do so.
Danisco’s sugar division is of interest to Tereos on several counts, Mr Duval explained. It is well managed and has been restructured: Danisco A/S has cut down the number of its factories to six and they all perform well. Danisco Sugar’s financial results rank amongst the best in the European sugar industry and the division clearly dominates the Scandinavian sugar sector, with close to an 80% market share. Finally, Tereos has a good relationship with Danisco's Scandinavian suppliers, who could agree to supply Tereos in the event of a takeover of Danisco Sugar by the French company.
Mr Duval isn’t worried about the state of the European sugar market, which has been plagued by price falls and worsening results. The reform of the quota system “cleaned up” the market, with some 100 sugar plants out of 250 closing over the last three to four years. The market is better balanced as a result and consolidation can begin to take place, Mr Duval said.
The Tereos CEO sees more European-wide groups, like Südzucker, emerging in future. Tereos intends to emulate the current market leader by playing a major role on the European market. It has one advantage: sugar beet yields are 20% higher in France than in Germany and Great Britain.
Tereos is considering the possibility of acquiring Ebro Puleva’s sugar division, which the Spanish market’s leading sugar company recently put up for sale. Whereas Danisco’s sugar division offers the advantage of geographical complementarity, the possible acquisition of Ebro’s sugar operations would follow a "logic of proximity", as Tereos is Ebro’s runner-up in Spain. Ebro has started work on a new sugar refining facility which could be of interest to Tereos, Mr Duval pointed out.
Poland’s leading sugar producer, Polski Cukie, is due to be privatised and could present Tereos with yet another acquisition opportunity, though Mr Duval ruled out the possibility of multiple acquisitions.
Despite all these talks of European acquisitions, Tereos isn’t focusing solely on Europe, Mr Duval added. The French group is one of the few major players on the European market to invest outside of Europe. Its CEO sees especially good opportunities in Brazil, a "country with significant advantages".
