Private equity firm KPS Capital Partners has agreed to acquire a controlling stake in Tate & Lyle’s Primary Products business in the Americas for $1.3 billion.
The deal will see the creation of two standalone businesses – Tate & Lyle and NewCo. Under the terms of the agreement, Tate & Lyle and KPS will each own 50% of the newly-formed company (NewCo), with KPS having board and operational control.
The new company will comprise of Tate & Lyle’s Primary Products business in North America and Latin America and shareholdings in its two joint ventures – Almidones Mexicanos and DuPont Tate & Lyle Bio-Products. The deal values the standalone unit at $1.7 billion.
The Primary Products business manufactures nutritive sweeteners, industrial starches, acidulants and other corn-derived products for a variety of applications including carbonated beverages, confectionery products, packaging products and animal feed.
Founded in 1906 as A.E. Staley Manufacturing, the unit has approximately 1,700 employees across six manufacturing facilities in the US and Brazil. The sweetener division’s European operations are not included as part of NewCo and will remain with Tate & Lyle.
Tate & Lyle first announced its intentions to sell the stake back in April, revealing that talks were underway with potential buyers.
Following the split, Tate & Lyle plans to reposition itself as a food and beverage solutions business focused on faster growing speciality markets. “With the pandemic accelerating the trend towards healthier food, now is the right time to focus our business on capturing this growth,” said Nick Hampton, CEO of Tate & Lyle.
He added: “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.”
Meanwhile, NewCo will focus on becoming a leading manufacturer of plant-based products for the food and industrial markets.
Michael Psaros, KPS co-founder and co-managing partner, said: “We will invest in research and development in close cooperation with customers to introduce new products and product categories, in order to capitalise on long-term trends such as the transition to a more plant-based diet by consumers worldwide.”
The deal marks KPS’ fifth investment in 2021 – including its acquisition of Crown Holdings’ EMEA food packaging unit – bringing its total investment activity this year to a combined value of over $6 billion.
The transaction is expected to be completed in the first quarter of 2022, subject to customary closing conditions.
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