The Sweetest Feeling
7 May 2001
10 June 2014
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M&A Weekly Update: effective service of a claim for breach of contract; changes to the UK Corporate Governance Code; and more
8 May 2014
4 April 2014
18 October 2013
Tate & Lyle refines sugar for retail and industrial use in five continents. Its largest operations are in the UK and North America and it has sugar beet processing businesses in Eastern Europe and the US. In addition, the company is involved in the packaging industry and produces speciality animal feeds. It is now entering a developmental period, reacting to changing European regulations promoting freer trade while investing in the development of new environmentally friendly bioplastics.
Gibber came to Tate & Lyle from Denton Wilde Sapte in 1990, after two years in private practice. "I joined Tate & Lyle largely on the urging of the group treasurer, who was looking for someone with a more corporate finance background," he explains. "I was very lucky because my predecessor took retirement and I was given the opportunity to run the department." Since January, the young lawyer has enjoyed dual roles. The company secretary retired at the end of last year and Gibber became joint company secretary and head of legal.
"I needed to merge more fully the legal and administrative functions of the two roles," says Gibber. He therefore recruited a deputy company secretary to handle the day-to-day administrative functions, such as minute taking. This makes it possible for Gibber to deal with higher level issues such as staffing and agenda without compromising "what I do best" - his legal work.
Gibber enjoys the challenges of the in-house lawyer. "Instead of dabbling in a number of companies, you become very familiar with the business of just one," he says. He notes one difference between private practice and in-house work as leaving "an environment where you have a feeling of security. There's such a wide range of expertise in law firms, that for any question raised someone will know the answer. In-house, the capabilities you have are around you. This can make you feel exposed if you prefer a safety net. Our team has only five years experience in a firm between us, so there's a very collegial atmosphere."
The team is made up of two assistants, Alyson Corrigan and Andrew Wright, and a secretary who serves all three lawyers. "A three-man team is nice, but when you get stretched, you get very stretched" laughs Gibber. Still, the head of legal is always prepared to use external help and has a longstanding relationship with Linklaters & Alliance. "I'm a big fan of theirs," he says. Last year, Linklaters helped the company purchase two starch and sweetener companies - Amylum in Europe and US company Staley. Gibber says: "These purchases had to be completed on the same day and it was very tight. The firm was brilliant." He also uses Beachcroft Wansbroughs for employment law. Other firms Gibber likes are Pinsent Curtis Biddle, Warner Cranston, Altheimer & Gray for property work and Ince & Co for shipping.
Selecting the right lawyers is all part of Gibber's role. Nevertheless, he maintains a very informal network of contacts but no panel. "Most of the work we generate can be done by any reasonable firm; therefore, we tend to choose those firms we work best with. We like to try new people if the opportunity arises, and I find that this often leads to good relationships. Really, it's all about the people.
"You know a firm's done a good job when nobody's grumbling about fees. If you have a bill that exceeds expectations, either you underestimated the work involved or you didn't handle it efficiently."
Gibber expands on this thought by explaining: "When outsourcing, you must remember that you're still in control - you're answerable in the same way that a building contractor is. If people are working overtime, it's likely that your own management skills are poor."
To an extent, budgeting is something Gibber has to be aware of, but he is adamant that "when everything's done on time, the cost of having that team working to a deadline pales into insignificance when you consider the benefits."
Despite the relative simplicity of the legal transactions Gibber's team practises, the agricultural arena is deeply political. After all, in most countries farmers are important vote carriers. "We're operating in an environment where regulation is a critical part of profitability," he says.
Perhaps because of this complexity, the company prides itself on maintaining long-term relationships with suppliers and developing partnerships, which is something that Gibber seems to embrace as a benefit of his job. "I like that the commercial side is more about finding solutions to things and getting things done than about the burden of legal principles," he says. "Some businesses are driven by lawyers, for example because the company is very concerned about protecting its legal rights. For us, however, these are not central issues - we're more concerned about competitiveness."
It is not just competition in the sweeter things in life that Tate & Lyle concerns itself with. The 75-year-old company is also developing a range of fermentation processes with valuable by-products. For example, the production of citric acid (vitamin C) through the fermentation of starch. Also on the horizon for the company is the development of bioplastics.
"Loads of people have good ideas," enthuses Gibber. "The difference between a successful and a non-successful company is in the quality of their executions. Think of the environmental benefits that could result if you can make plastic from a renewable source like corn or sugar." Products such as citric acid can be made from different carbohydrate sources, available throughout the world. There are then a number of different alternatives. "The goal is to be involved in one of them," Gibber says. "So long as it's the right one, you're okay."
In the past, however, the company has enjoyed less success at expanding its product range. "When I joined, we were very much focused on geographic penetration," says Gibber. "Looking back, we can see that in some cases this led to the development of businesses which did not meet the criteria for permanence normally set down." As a result, some of the company's more peripheral activities are now being wound down. Last year, for example, Linklaters was involved in selling sugar company Australian Bundaberg. Similarly, the animal feed businesses in the UK and North America were sold. Gibber concedes that "operationally, these businesses were very good", but in terms of shareholder returns they were not justifiable.
Unfortunately for the company, the political regulations surrounding the industries with which it is involved often have the knock-on effect of making businesses difficult to run. "These are very challenging waters," explains Gibber. The way in which the company interacts with these regulations then becomes a very significant piece of the jigsaw.
At present, the desire for freer trade within the industry is a general trend any food production company needs to be aware of. Sadly, this is something that Gibber says "always comes at a price". He adds: "There's a constant creative tension between the general desire to open up trade and the need to analyse carefully the consequences, which could be unexpected." Gibber cites the recent "Everything But Arms" proposal as an example of this.
This was proposed last September by Pascal Lamy, the European Commissioner for Trade. The proposal suggests that 48 of the least-developed countries on the planet have tariff-free access to the European Union on all products except arms, sugar, rice and bananas. These latter three food products are considered sensitive by the European Commission and separate phasing arrangements have therefore been suggested for these. For sugar products, tariff-free trade has been postponed until the end of June 2009, giving the sugar industry time to prepare. The proposal has been passed and is now in front of the Directorate General for Trade awaiting implementation.
In the current European regime, the sugar industry has some profit protection through tariffs and quotas, and Gibber is suspicious about this new proposal. "If we bring down the stack of cards in this way, there could be all sorts of consequences," he says. "Whatever's decided, we must end up with a situation where all parties involved come away with something that is of value."
How the proposal ends up affecting the company in practice remains to be seen. All that is certain is that the emphasis on freer trade and the environmental benefits of future products suggests that there may be truth in the slogan "Smile, it's Tate & Lyle".
Head of legal
Tate & Lyle
|Organisation||Tate & Lyle|
|FTSE 250 Ranking||164|
|Legal Capability||Three lawyers|
|Head of legal||Robert Gibber|
|Reporting to||Chief executive Larry Pillard|
|Main law firms||Altheimer & Gray, Beachcroft Wansbroughs, Ince & Co, Linklaters & Alliance, Pinsent Curtis Biddle and Warner Cranston|