J&J sells popular Splenda sugar substitute to Heartland Food

(Recasts throughout; adds company comments, details on Splenda, byline)

By Ransdell Pierson

Aug 25 (Reuters) - Johnson & Johnson (NYSE: JNJ - news) on Tuesday said it was selling its widely used Splenda sugar substitute to privately held Heartland Food Products Group in order to focus on other consumer brands.

J&J introduced Splenda in 1999, whose slogan "Made (Paris: FR0010328302 - news) from sugar so it tastes like sugar," helped it to grow into a brand with eventual annual sales of about $300 million and overtake sweeteners containing saccharin and aspartame.

Splenda's sweetening agent, called sucralose, is made from sugar that has been chemically altered to make it calorie free.

J&J has been looking for a buyer for Splenda, which faces fierce competition from cheaper generic Chinese rivals, Reuters reported in December.

J&J and Heartland, which did not disclose financial terms of the deal, said they expect it to close before the end of the year.

J&J, in a statement, said it was selling Splenda in order to focus on other healthcare categories, including baby care, skin care and products to treat pain and wounds.

British ingredients firm Tate & Lyle (LSE: TATE.L - news) makes sucralose and sells it to J&J, which in turn markets it worldwide under the Splenda brand in familiar yellow packages used in homes and in restaurants.

Tate & Lyle also makes sucralose used in beverages and other retail products, unrelated to the company's long-standing relationship with J&J and Splenda.

Chris Marsh, a spokesman for Tate & Lyle, said it was not yet clear whether his company would manufacture sucralose for Heartland, an Indiana company that makes low-calorie sweeteners as well as creamers and beverages.

J&J shares fell 2.25 percent to $90.73 on the New York Stock Exchange on Tuesday. Tate & Lyle shares rose almost 0.9 percent in London. (Additional reporting by Vidya Loganathan; Editing by James Dalgleish)