Sweetener and ingredients company Tate & Lyle has agreed to be acquired by US rival Ingredion Incorporated in a deal valued at approximately £2.7 billion, marking the latest in a series of foreign takeovers of UK firms.
Under the terms of the agreement, Illinois-based Ingredion will pay up to 615 pence per share for London-listed Tate & Lyle, comprising 595p in cash plus additional dividend payments. The transaction values Tate & Lyle at £2.7 billion, or £3.7 billion including debt, and follows several earlier proposals from Ingredion.
The deal comes after Tate & Lyle's share price faced pressure over the past year, with the company issuing a profit warning in October and reporting a 10% decline in first-half profits in November.
Industry challenges and strategic rationale
David Hearn, chairman of Tate & Lyle, stated: "Looking forward, we believe the next chapter with Ingredion will create a business with even greater potential, greater scale, and increased investment in innovation in support of customers. The board of Tate & Lyle believes Ingredion's offer represents an attractive opportunity for shareholders to crystallise value in cash, and that it will be an excellent steward of Tate & Lyle."
The takeover is another blow to the London market, which has seen a wave of acquisitions of UK companies by foreign entities. Recently, William Hill owner Evoke agreed to a £243.1 million takeover by Greek gambling firm Bally's Intralot, while laboratory testing company Intertek's board backed a £9.4 billion proposal from Swedish firm EQT. Insurance firm Beazley and asset manager Schroders have also agreed to be taken private this year.
Tate & Lyle's performance has weakened in recent years due to declining customer demand and rising costs. The company noted that "over the last year, the operating environment for ingredients companies and their customers has deteriorated, with consumer sentiment weakening across all major regions."
Company background and future plans
Tate & Lyle, founded over 165 years ago, is listed on the FTSE 250 Index. While the brand is synonymous with sugar products, the company sold its sugar division—including the Golden Syrup factory in London—to American Sugar Refining for £211 million in 2010. That deal allowed the US firm to continue using the brand on sugar products, leaving Tate & Lyle focused on sweeteners and industrial food ingredients.
Last year, Tate & Lyle acquired CP Kelco, a food and drink ingredients business, in a deal worth around £1.4 billion.
Ingredion, the US suitor, employs more than 12,000 people worldwide and produces sweeteners, starches, nutritional ingredients, and biomaterials used in food, beverages, paper, and pharmaceuticals. The company traces its roots back over 100 years and has grown through a series of acquisitions in the US and overseas.
For Ingredion, the acquisition will expand its geographic reach and broaden its portfolio into areas such as texturants, sugar reduction, and fortification. The combined companies aim to achieve cost savings of approximately $130 million (£97.5 million) annually by the end of 2030.
Jim Zallie, chairman and chief executive of Ingredion, commented: "Combining Ingredion and Tate & Lyle's complementary portfolios creates a global leader in ingredient solutions with the expertise and geographic reach to help shape the future of food. The combined business will be better positioned to serve customers' needs for the development of great-tasting, healthier and affordable food products that consumers demand. This compelling combination will create exciting new possibilities for employees and generate significant value for all stakeholders."
