Dive Brief:
- Tate & Lyle said its adjusted operating profit, which excludes restructuring charges, fell for the full year to $583.6 million.
- The London-based company, which supplies sweeteners and starches and other ingredients to food manufacturers, blamed cold weather and a drop in soft-drink sales in the U.S. for the poor performance, and warned that profit would fall again in the current fiscal year.
- Sales of Splenda, the company's flagship product, declined as the sucralose sweetener was hurt by increasing competition in the sweetener market.
Dive Insight:
Tate & Lyle is a vulnerable position. Its shares have fallen some 17% this year, leading to speculation that rivals such as Bunge or Cargill may launch a takeover bid. In the meantime, Tate & Lyle is seen as likely to bid for German ingredient maker Wild.
It seems likely now that the poor earnings report will prompt some merger activity very, very soon. Either the big boys will smell blood in the water and decide now is the time to buy up Tate & Lyle, or the British company will decide it's just too vulnerable to wait any longer and make a defensive move to buy Wild.