July 12th 2021
Tate & Lyle spins off industrial sweeteners, starches division to focus on specialty food and beverage solutions.
Tate & Lyle has struck a $1.3bn deal to sell a controlling stake in its ‘Primary Products’ industrial sweeteners and starches business in the Americas to private equity firm KPS Capital Partners, as it focuses on specialty sweeteners, fibers, texturants and other high-value food & beverage ingredients.
The Primary Products business will be moved into a newly formed company called NewCo in which Tate & Lyle will retain a 50% stake.
NewCo comprises three corn wet mills in the US, acidulant plants in the US and Brazil; a 50% stake in two joint ventures – Almex in Guadalajara, Mexico and Bio-PDO, in Loudon, Tennessee; and a grain elevator network and bulk transfer stations in North America.
Tate & Lyle will in turn focus on specialty ingredients for sweetening, mouthfeel, and fortification, such as allulose, sucralose, locust bean gum, stevia, specialty starches, fiber, tapioca and products from selected corn wet mills in Indiana, the Netherlands, and Slovakia.
Primary Products’ European operations, which accounted for around 5% of Primary Products’ revenue in the year ended 31 March 2021, will remain with Tate & Lyle, which said the deal would reduce its exposure to commodities markets in North America.
Upon completion of the deal – expected in the first quarter next year – Tate & Lyle plans to return about £500m to shareholders in a special dividend and retain remaining proceeds for investment, to strengthen its balance sheet, and for M&A, said Tate & Lyle, which sold its sugar business in 2010.
CEO Nick Hampton stated: “Today’s announcement represents the next phase in the evolution of Tate & Lyle. Our one strong company will become two stronger businesses, both in a position to pursue new and exciting growth opportunities in their respective markets.”
Speaking on a call with analysts this morning, Hampton said sweetening, mouthfeel, and fortification were areas of “significant growth” for Tate & Lyle, adding: “Over the last three years, in sweetening, revenue from products supporting sugar reduction, excluding sucralose, increased by a compound annual growth rate of over 20%. Over the same period, in mouthfeel, our range of clean label texturants delivered revenue growth with a CAGR of over 30%; and in fortification revenue for our soluble fibers grew by more than 15%.”