Sugar daddy may try to add some sauce to the ABF mix

Associated British Foods (ABF) has given its strongest hint yet that HP Foods is on its shopping list of companies that could reduce its reliance on sugar.

ABF, which revealed a 16% year-on-year rise in pre-tax profit to £268m in the 24 weeks ended March 5 on sales which were up 10% to £2.618bn, said it wanted to develop business in several areas to minimise exposure to European sugar: "A key growth platform is UK grocery."

It declined to comment on HP, which French owner Danone is looking to off-load as it focuses on dairy, bottled water and biscuits. However, a source close to the group said: "It doesn't take a huge leap of imagination to gather that they are in the frame."

HP, which owns Lea & Perrins, Amoy Noodles, Rajah Indian herbs, HP sauces and canned goods and Daddies ketchup, could have a £450m price tag, said analyst Bob Waldschmidt at City firm Merrill Lynch. It may also interest Premier Foods, which makes HP's canned goods under licence.

ABF chairman Martin Adamson said cutting the share of profit generated by UK sugar was a priority ahead of the reform of the European Union's sugar regime.