By David Jones
LONDON (Reuters) - Sugar and sweetener group Tate & Lyle <TATE.L> named Reckitt Benckiser <RB.L> executive Javed Ahmed as its new chief executive, driving Tate's shares up over 10 percent on hopes he can revive the group's fortunes.
Ahmed, 49, heads Reckitt's European business and has worked for Benckiser and then Reckitt Benckiser for the last 17 years. He will take over by November 15, 2009, from Iain Ferguson, 53, who has led the group for the last six years.
Tate's shares jumped 10.7 percent to a high of 302-3/4 pence and last traded up 9.9 percent at 300-1/2p by 2:10 p.m.. The stock had fallen some 32 percent so far this year before the announcement over Ahmed's appointment.
"We believe this reflects both the high regard in which Mr Ahmed is held at one of Britain's top companies and the fact that the embattled Mr Ferguson is leaving," said analyst Jeremy Batstone-Carr at brokers Charles Stanley.
"Tate has already warned on profits twice over the current year, the share price has collapsed and recently dropped out of the FTSE 100," he added.
London-based Tate has struggled over the last two years with two profit warnings in 2009 and then an international tribunal ruling last month that it cannot prevent cheap Chinese versions of its sucralose super sweetener Splenda.
The ruling left a bitter taste at Tate which has also suffered as recession hit demand for its range of sweeteners in food and drink products, industrial starches for the paper industry and ethanol in U.S. gasoline.
Facing tough trading and high debts, Ferguson aimed to keep key investors on side by committing the group to a progressive dividend policy which he defined as increasing the payout broadly in line with Britain's level of inflation.
Although the dividend policy is expected to be maintained next week when the group reports annual results on May 28, analysts believe Ahmed may look to cut the payout in future to relieve Tate's high debt and as the dividend yield has reached a heady 9.4 percent.
Ahmed had worked at Benckiser for seven years before Reckitt Colman took it over in 1999, looking after its Canadian business and then its UK and Irish operations.
After the Benckiser takeover, Ahmed ran the joint group's Northern European operations, then headed up its North American and Australian business before returning in 2008 to run the group's European operations.
Reckitt, the maker of Finish dishwasher products, Cillit Bang cleaner and Lysol disinfectants, has consistently beaten annual sales and profits targets over the last decade to make it one of the best performing stocks in London.
A Tate spokesman said the move had been planned for some time, and Ferguson was looking for fresh challenges. He was recently made non-executive director of British baker and retailer Greggs <GRG.L>.
Ferguson will continue as chief executive until Ahmed's arrival, which will be no later than November 15.
(Reporting by David Jones; Editing by Simon Jessop and Elaine Hardcastle)