Johnson & Johnson sells Splenda sugar substitute to Heartland Food

<p>The amount of the transaction has not been disclosed.</p>

Johnson & Johnson (J&J) has announced it is letting go of its artificial sweetener brand Splenda. J&J's McNeil Nutritionals unit will sell the brand to to Heartland Food Products Group for an undisclosed amount, according to a statement released today (August 26th). The transaction is expected to close by the end of the year.

Heartland already sells products with sucralose, the ingredient used in Splenda, but the move will allow it to benefit from the well-known Splenda brand.

British firm Tate & Lyle makes sucralose and sells it to J&J, which in turn sells it worldwide under the Splenda brand. Chris Marsh, a spokesman for Tate & Lyle, told Reuters it was not yet clear whether his company would manufacture sucralose for Heartland.

Annual sales reach $300 million

Sucralose is made from sugar that has been chemically altered to make it calorie free. It was approved by US regulators in 1998 and has since overtaken aspartame in the sweetener market. J&J introduced Splenda in 1999, with annual sales now reaching about $300 million (£191 million).

Heartland said that Splenda will bring 100 new jobs to its Indianapolis manufacturing plant, distribution centre and corporate office in Carmel, Indiana.

"We are very excited about our opportunity to own the Splenda brand business and welcome a talented team of professionals to our organisation. Splenda fits well within our strategy to offer the very best tasting products to sweeten foods and beverages without adding calories," said Ted Gelov, Heartland chairman. "The acquisition of Splenda further enhances our ability to offer our consumers products that support their growing desire to live healthier lives," he added. 

Splenda has been facing fierce competition from cheaper generic Chinese rivals in recent years. Johnson & Johnson said that the sale was part of its ongoing strategy to concentrate on key consumer areas such as baby care, pain care and oral care.

J&J shares fell 2.25 per cent to $90.73 on the New York Stock Exchange today.

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.