Tate & Lyle to Buy CP Kelco for $1.8 Billion in Push to Cash in on Health Nutrition Trends
Tate & Lyle said the deal will speed up delivery of its aim to drive revenue growth toward the higher end of its 4% to 6% a year target range
Tate & Lyle TATE -4.98%decrease; red down pointing triangle agreed to buy nature-based ingredient provider CP Kelco for $1.8 billion as the U.K. group jockeys for position in a highly competitive market to meet growing demand for healthier and more sustainable food and drinks.
Consumers are asking more of food producers, fueling demand for healthier and sustainably sourced ingredients, transparent labeling and a commitment to fair labor practices and companies are diversifying their offering to satisfy that demand.
London-listed Tate & Lyle, which provides food-and-beverage ingredients, said it would acquire CP Kelco from J.M. Huber Corporation by paying $1.15 billion in cash and issuing new ordinary shares to Huber, which will become a long-term shareholder in Tate & Lyle.
CP Kelco provides pectin, specialty gums and other nature-based ingredients. The acquisition includes CP Kelco U.S., CP Kelco China, and Denmark-based CP Kelco ApS, together with their respective subsidiaries.
The deal will make it easier for Tate & Lyle to seize on trends toward more plant-based, clean-label and sustainable ingredients, said Tate & Lyle Chief Executive Nick Hampton.
“The growth potential of the proposed combined business is significant,” he said, adding that Tate & Lyle is fully aware of CP Kelco’s products since the companies have been collaborating for many years.
Tate & Lyle counts more than 3,300 employees across 121 countries. The group makes products that reduce sugar, calories and fat and add fiber and protein in beverages, dairy, bakery, snacks, soups, sauces and dressings.
From a financial standpoint, the deal will drive revenue growth toward the higher end of Tate & Lyle’s 4% to 6% per year target by the end of March 2028.
The acquisition is subject to regulatory approvals and is expected to be completed in the fourth quarter this year.