The potential takeover would combine two major reformulation specialists as demand grows for healthier food and beverage ingredients solutions.
Shares in Tate & Lyle surged 45 percent after the company confirmed it was in talks with US rival Ingredion over a possible £2.7bn takeover, in a move that would bring together two major players in HFSS reformulation and speciality ingredients.
The FTSE 250 ingredients group said Ingredion had made “a number of approaches” regarding a potential offer. The latest proposal values Tate & Lyle shares at up to 615p each through a combination of 595p in cash and dividends of up to 20p a share.
Shares climbed to 546.5p following the announcement, their highest level since August.
The proposed deal reflects growing consolidation in the ingredients sector as manufacturers face mounting pressure to reformulate products and reduce salt, sugar and fat content in line with changing consumer demand and tighter HFSS regulation.
Both companies work closely with food and beverage brands to develop healthier products using sweeteners, starches and texture solutions.
Tate & Lyle has spent the past two decades reshaping itself from a bulk sugar producer into a specialist ingredients business. Although still strongly associated with sugar products, the company sold its sugar division – including London’s Golden Syrup factory – to American Sugar Refining for £211m in 2010 as part of its strategic pivot away from commodities.
The group has continued to expand through acquisitions, including last year’s £1.4bn purchase of CP Kelco, which strengthened its capabilities in texture solutions and reformulation.
Ingredion similarly supplies sweeteners, starches and ingredient solutions to global food and beverage manufacturers.
Tate & Lyle statement
In a statement, Tate & Lyle said:
The Proposal follows a number of earlier approaches from Ingredion to the Board regarding a possible offer for Tate & Lyle.
The Board and Ingredion are in discussions regarding the Proposal.
There can be no certainty that any offer will be made, nor as to the final terms on which any offer might be made.
A further announcement will be made when appropriate.”
Ingredion has until 11 June under UK takeover rules to make a formal offer or withdraw its interest.
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