Tate & Lyle loses sweetener case

The decision could be a bitter blow to the firm, analysts say

Tate & Lyle has lost a court case to defend its Splenda artificial sweetener from Chinese manufacturers producing cheaper, generic competitors.

Its shares dropped by about 12% after the ruling by a judge at the US International Trade Commission.

Analysts say the ruling will allow manufacturers to compete against Tate & Lyle in the market for sucralose - the sweetener's generic name.

The firm is to appeal, asking for a decision by the full commission.

We would not have proceeded with the case unless we believed we had adequate evidence to demonstrate that our patents are being infringed Tate & Lyle See Tate & Lyle's share price

Splenda, a sweetener with no calories, makes up almost 25% of the firm's profits, analysts say.

Robustness questioned

"At best, we view this decision as poor for sentiment," said Citi analysts.

"While we see no immediate risk, we suspect that questions will inevitably be raised on the robustness of sucralose profits over coming years."

Meanwhile, analysts at Numis said the case "just illustrates the risks involved with Tate's portfolio".

The appeal is expected to be held in January 2009.

The firm's general counsel, Robert Gibber, said that Tate & Lyle would not have proceeded with the case "unless we believed we had adequate evidence to demonstrate that our patents are being infringed".