Tate & Lyle eyes sale of controlling stake in sweeteners unit
Break-up would allow 162-year-old UK company to focus on making healthier foods
Tate & Lyle said it was in talks to sell a controlling stake in a division that generates the bulk of its £2.9bn annual revenues, as the 162-year-old company looks to shift its focus towards healthier foods.
The FTSE 250 group said on Sunday it was in discussions with potential buyers for a majority share in its primary products arm, which makes artificial sweeteners and industrial starches, particularly for the North American market. The division reported £1.8bn in revenues in the 12 months to April 2020.
The move is designed to allow London-based Tate & Lyle to focus on its food and beverage solutions arm, which helps companies such as Mondelez and Nestlé replace sugar, salt and fats in their food products.
The company, which is led by chief executive Nick Hampton, believes splitting off its businesses will allow a greater focus on the food and beverage arm, which has higher profit margins, faster revenue growth and alignment with consumer trends for healthier living.
Tate & Lyle made the announcement after the Sunday Telegraph first reported the sale discussions. The group added that the talks were at an early stage with no certainty a transaction would be completed.
A person familiar with the talks said Apollo Global Management and Cerberus were among those to engage in discussions to acquire a majority stake in the primary products division. The two US funds did not immediately respond to requests for comment.
Tate & Lyle is being advised by its brokers, Bank of America and Citi.
The company, whose roots stretch back to 1859, was once a leading power in the global sugar industry, expanding along with the British empire to become a familiar household name.
It sold its sugar business in 2010 and now makes sweeteners such as stevia and sucralose, as well as starches used both in food and the manufacturing of products such as cardboard boxes. It competes with larger US-based rivals Ingredion and Archer Daniels Midland.
Tate & Lyle said it “continues to successfully execute its strategy and remains confident in the future growth prospects of the company”.
“The board believes that if a transaction of this nature was completed, it would enable Tate & Lyle and the new business to focus their respective strategies and capital allocation priorities and create the opportunity for enhanced shareholder value,” it said.