Tate & Lyle to sell controlling stake in sweetener arm for $1.3bn
Food group will offload holding to private equity group as it shifts towards healthier products
Tate & Lyle has agreed to sell a controlling stake in its artificial sweeteners division in the Americas to KPS Capital Partners in a $1.3bn deal as the food group pivots towards healthier products.
The division, which also makes industrial starches, generates most of Tate & Lyle’s £2.9bn annual revenues. The London-listed company announced in April that talks were under way with potential buyers.
The 162-year-old group, once a leading global operator in the sugar industry, will retain a 50 per cent share in the business, which focuses on plant-based products for the food and industrial markets.
KPS, a New York-based private equity group, will hold the remainder and also secure board and operational control. Tate & Lyle expects to receive gross proceeds in cash of about $1.3bn. The deal gives the business an enterprise value of $1.7bn.
“We have been very impressed with KPS and are excited to partner with them,” said Nick Hampton, chief executive of Tate & Lyle. “The proposed transaction represents an ambitious and bold step forward for Tate & Lyle.”
Once the transaction is completed, which is expected in the first quarter next year, the board intends to return about £500m to shareholders in a special dividend.
Tate & Lyle plans to retain remaining proceeds for further investment and to strengthen its balance sheet, the company said in a statement on Monday.
The new company will comprise Tate & Lyle’s primary products business, which makes artificial sweeteners and industrial starches, in North America and Latin America, including corn mills in the US and a 50 per cent stake in a joint venture in Mexico.
The move is designed to enable 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 products.
The FTSE 250 company’s roots stretch back to 1859 and it expanded along with the British empire to become a household name.