December 23, 2009 / 7:34 AM / 10 years ago

UPDATE 2-Wessanen sells TOL unit for $190 mln, shares dive

* Selling price below analyst expectations

* Repositioning to focus on Europe

* Says will realise book loss of 50 million euros in Q4

* Shares down 9 pct, underperforming main index

(Adds detail, background, shares, analyst comment)

By Harro ten Wolde

AMSTERDAM, Dec 23 (Reuters) - Dutch food group Wessanen BSWSc.AS said on Wednesday it was selling its Tree of Life (TOL) U.S. unit for $190 million, shy of analyst expectations and sending its shares down as much as 9 percent.

Wessanen, hit by lower sales and accounting irregularities, said it would sell the organic and natural food specialist to U.S. based Kehe Food Distributors, as it retrenches to shore up its finances.

Analysts say Wessanen could be evolving into a break-up story, with planned divestments reducing the company’s size by two thirds and the remaining business being an attractive takeover target.

The company said it would make a loss of about 50 million euros ($72 million) on the TOL sale, to be booked in the fourth quarter.

Wessanen shares were down 9 percent at 4.37 euros by 0857 GMT, underperforming a flat Amsterdam midcap index .AMX

“The disposal of TOL is being effected at a lower than expected price,” SNS Securities analyst Richard Withagen said.

Chief Financial Officer Frans Eelkman Rooda said a “significant” amount of the sale proceeds would go to debt reduction and to strengthen its balance sheet to support growth of its European businesses.

ANOTHER BREAK-UP STORY?

Struggling with debts of 179 million euros at the end of September, Wessanen has seen profit slump in the downturn and said in October it would report a fourth-quarter operating loss.

Eelkman Rooda declined to say how much debt would remain after the transaction but SNS Securities analyst Withagen said he expected debt to be reduced to about 50 million euros.

In July, Wessanen amended its debt covenants, agreeing to keep 2009 net debt under 4 times consolidated earnings before interest, taxes and depreciation and amortisation before extraordinary items (EBITDAE), prior to its divestments.

Tree of Life has been with Wessanen since 1985 and generates about 50 percent of the group’s revenue.

Wessanen will ask shareholders to approve the sale at a meeting on Jan. 13, where it also plans to detail its new strategy. (Editing by David Cowell) ($1 = 0.6990 euro)

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