UK-based food and beverage products provider Tate & Lyle has agreed to acquire CP Kelco, a provider of pectin, speciality gums and other nature-based ingredients, for a total of $1.8bn.
Under the terms of the deal, Tate & Lyle will purchase all the issued shares of CP Kelco US, CP Kelco China, and CP Kelco, along with their respective subsidiaries, from JM Huber (Huber).
The proposed transaction is expected to be completed in the fourth quarter of this calendar year, subject to receipt of certain customary regulatory approvals.
Upon closing, Huber will become a long-term shareholder in Tate & Lyle, with around 16%, and will be entitled to appoint two non-executive directors to the Tate & Lyle Board of Directors.
Tate & Lyle will fund $1.15bn from new and existing debt facilities and issue 75 million new ordinary shares to Huber with an implied value of around $645m.
Tate & Lyle chair David Hearn said: “Today’s announcement represents a major acceleration in the delivery of Tate & Lyle’s growth-focused strategy and the Board is very excited about the opportunities ahead.
“Our strong management team has all the right capabilities to drive significant value from this transaction for the benefit of our shareholders, customers and employees.
“We look forward to welcoming their two new non-executive directors to our Board, and to working with them, and our other shareholders, to progress the enlarged company’s growth strategy.”
The British food company has been executing a major strategic transformation over the last six years, to become a growth-focused speciality food and beverage solutions business.
It was completed on 23 May 2024, with the announcement of the sale of its remaining interest in Primary Products Investments (Primient).
Tate & Lyle said that the proposed transaction significantly advances its strategy to become a top speciality food and beverage solutions business, and the partner of choice for customers.
Also, it would drive stronger revenue growth and significant adjusted EBITDA margin improvement over the next few years., said the British sweetener maker.
CP Kelco president Didier Viala said: “We are delighted to be joining with Tate & Lyle to create a leading and differentiated speciality food and beverage solutions business.
“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.”
