Sweetener and ingredients firm Tate & Lyle has revealed talks over a possible £2.7 billion takeover by US rival Ingredion Incorporated, marking the latest swoop on a UK company by an overseas suitor.
Takeover details
London-listed Tate & Lyle said it had received an approach from Illinois-based Ingredion worth 615p per share in cash, which follows a number of earlier proposals. Tate and Ingredion are now in discussions, but the company stressed there was no certainty an offer will be made.
Under Takeover Panel rules, Ingredion has until 5pm on June 11 to make a firm offer or walk away.
Context of overseas bids
The approach comes amid a spate of bids for British firms by foreign buyers. Earlier this week, laboratory testing company Intertek gave its backing to a £9.4 billion proposal from Swedish firm EQT.
Shares in Tate & Lyle soared by over 50% in afternoon trading on Thursday, reflecting investor optimism about the potential deal.
Recent performance
The takeover tilt comes after Tate & Lyle's shares had come under pressure over the past year. The company warned over full-year profits last October and revealed a 10% drop in first-half profits in November, citing a slowdown in market demand.
Company background
Tate & Lyle last year bought food and drink ingredients business CP Kelco in a deal worth around £1.4 billion. The group is listed on the FTSE 250 Index and was first founded more than 165 years ago.
While the brand is known for sugar products, Tate 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 its sugar products, leaving Tate & Lyle focused on sweeteners and its industrial food ingredients division.
About Ingredion
Tate & Lyle's US suitor, Ingredion, employs more than 12,000 people worldwide. It makes sweeteners, starches, nutritional ingredients and biomaterials used in food and drinks, as well as paper and pharmaceuticals. The firm traces its roots back more than 100 years and has grown through a series of acquisitions in the US and overseas.
