Tate & Lyle Sells Majority of Corn-Based Sweeteners Business at Enterprise Value of $1.7B

By Lynda Kiernan-Stone, Global AgInvesting Media

Tate & Lyle has announced its agreement to sell a majority stake in its Primary Products division - a production unit that makes corn-based sweeteners, industrial starches, and acidulants in North America and Brazil, to KPS Capital Partners.

The deal will result in two new standalone businesses - the first, Tate & Lyle, which will focus on the growing specialty market, and the second, called NewCo, which will focus on plant-based foods and beverages, which will have an enterprise value of $1.7 billion.

Through this transaction Tate & Lyle expects to earn gross cash equaling $1.3 billion, or net cash proceeds of about $1.2 billion, with approximately $700 million being distributed to Tate & Lyle’s shareholders via a special dividend and share consolidation once the deal closes in Q1 2022.

“Today’s announcement represents the next phase in the evolution of Tate & Lyle,” said Nick Hampton, chief executive, 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.”

“With our new focus and a step-up in R&D investment, innovation and solutions development, we will be able to significantly enhance how we serve our customers, and accelerate growth,” continued Hampton. “Our deep scientific expertise, unique product portfolio and leading technical capabilities in sweetening, mouthfeel and fortification, position us very well to benefit from growing consumer demand for food and drink that is lower in sugar, calories and fat, and with added fiber. With the pandemic accelerating the trend towards healthier food, now is the right time to focus our business on capturing this growth.”

KPS Capital Partners

Headquartered in New York, KPS Capital Partners is a global private equity firm focusing on making majority stake investments across the manufacturing and industrial business spheres. Its portfolio currently includes 149 manufacturing facilities across 22 countries that are generating nearly $11 billion in annual revenue.

Once this deal closes, NewCo will join KPS’ portfolio bringing with it:

• Corn wet mills in Decatur, Illinois; Lafayette, Indiana; and Loudon, Tennessee.

• Acidulant plants in Dayton Ohio; Duluth, Minnesota; and Santa Rosa, Brazil.

• Fifty percent stake in two joint ventures - Almex in Guadalajara, Mexico; and Bio-PDO in Loudon, Tennessee.

• A grain elevator network and bulk transfer stations across North America.

KPS and Tate & Lyle will each own 50 percent of the new company, with KPS having control of both the operations and the board.

Michael Psaros, co-founder and managing partner, KPS Capital Partners, commented, “KPS is excited to make a controlling investment in Primary Products and is honored to partner with Tate & Lyle for many years to come. KPS and Tate & Lyle have complete alignment of interests and have cemented a partnership based on shared values such as the safety of our respective employees and a demonstrated commitment to sustainability.”

“KPS believes that Primary Products is a superior investment opportunity and that there is a tremendous opportunity to materially increase revenues, productivity and profitability,” continued Psaros. “We look forward to working with the existing Primary Products management team and its employees to build on the great platform they have established and drive future growth.”

For Tate & Lyle, the company sees this deal as a step toward achieving a number of goals within the next five years, including:

• Repositioning the company as a global food and beverage solutions business.

• Strengthening its attractiveness as a partner to other specialty ingredient businesses.

• Reducing its exposure to commodities markets and bulk ingredients in North America.

• Strengthening its balance sheet to drive capital toward organic and inorganic growth.

“We have been very impressed with KPS and are excited to partner with them in the next phase of the development of the Primary Products business. KPS has proven expertise in managing and creating value from large manufacturing businesses, and we look forward to working with them under the long-term agreements we have established to provide supply security and economic protection to both businesses, and to jointly benefit from cash dividends and future value creation,” said Hampton.

“The proposed transaction represents an ambitious and bold step forward for Tate & Lyle,” he added. “Driven by our purpose, all our people, expertise and investment will be dedicated to growing our global food and beverage solutions business and creating healthier food and drink. An exciting future lies ahead for Tate & Lyle."

- Lynda Kiernan-Stone is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and Agtech Intel News, as well as HighQuest Group's Oilseed & Grain News. She can be reached at lkiernan-stone@globalaginvesting.com.