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Tate & Lyle to acquire CP Kelco in $1.8bn deal, creating global speciality ingredients powerhouse
Siân Yates

Siân Yates

20 June 2024

Tate & Lyle to acquire CP Kelco in $1.8bn deal, creating global speciality ingredients powerhouse

Tate & Lyle, a global provider of speciality food and beverage ingredients, has announced a proposed combination with CP Kelco, a producer of pectin, speciality gums and other natural ingredients.


The deal, valued at $1.8 billion (£1.4 billion), will create a powerhouse in the growing global speciality ingredients market.


The combination of Tate & Lyle's expertise in sweetening, mouthfeel and fortification and CP Kelco's expertise in pectin and speciality gums will strengthen the company's solutions capabilities across its core categories.


The enlarged business will be well-positioned to capitalise on the rising consumer demand for healthier, more sustainable and tastier food and drink products.


Nick Hampton, chief executive of Tate & Lyle, said: "A combination with CP Kelco is the perfect fit with Tate & Lyle's growth-focused strategy. Together, we will have a compelling customer proposition to meet the growing global demand for plant-based, clean-label and sustainable ingredients and solutions."


The transaction is expected to drive stronger revenue growth and significant adjusted EBITDA margin improvement for Tate & Lyle over the next few years.


The company anticipates realising at least $50 million (£40 million) in annual cost synergies by the end of the second full financial year following completion, with the potential for an additional 10% in revenue synergies over the medium term.


Didier Viala, president of CP Kelco, added: "CP Kelco and Tate & Lyle are both highly customer-focused businesses with a shared passion for science and innovation. With our complementary portfolio and deep technical expertise, we will bring new value to our customers and new opportunities for our employees."


The transaction is expected to be accretive to Tate & Lyle's adjusted earnings per share, including cost synergies, in the second full financial year after completion, and strongly accretive thereafter.


The company's return on invested capital is also expected to exceed its weighted average cost of capital within five years.


To finance the deal, Tate & Lyle will use a combination of new and existing debt facilities, as well as the issuance of 75 million new ordinary shares to Huber Corporation, the current owner of CP Kelco.


Huber will become a long-term shareholder in Tate & Lyle, holding approximately 16% of the combined entity, and will be entitled to appoint two non-executive directors to Tate & Lyle's board.


The proposed transaction is subject to customary regulatory approvals and is expected to close in the fourth quarter of 2024.


Tate & Lyle also announced that it will commence a $270 million (£215 million) share buyback programme today, originally planned to follow the completion of the sale of its remaining interest in Primient.


#TateandLyle #CPKelco #acquisition #ingredients


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