Tate & Lyle to forgo shareholder vote on proposed acquisition of CP Kelco

Tate & Lyle has said it no longer needs stakeholder approval for the US$1.8 billion proposed buyout of CP Kelco from J.M Huber Corporation. The decision is based on the Financial Conduct Authority’s changes to the UK Listing Rules, which took effect from July 29.

“Under the New Listing Rules, completion of the Proposed Transaction is no longer required to be conditional on the approval of Tate & Lyle’s shareholders,” says the company.

Tate & Lyle and Huber have agreed that the condition under the sale and purchase agreement to seek approval for the deal from Tate & Lyle’s shareholders will “no longer apply.”

The prominent pectin supplier’s purchase depends on customary regulatory approvals and is expected to complete before the end of this year.

Huber will become a long-term shareholder (c.16%) in Tate & Lyle if the deal goes through, and will be allowed to appoint two non-executive directors to the Tate & Lyle board, which believes that “the Proposed Transaction is in the best interests of Tate & Lyle’s shareholders.” 

When it was announced, the decision to combine the businesses sparked concerns among investors when it led to a dropping in share prices, while the company maintained it expects to produce revenue synergies of up to 10% of CP Kelco’s revenue over the medium term.

Strategic transformation

Tate & Lyle has been on a “strategic transformation” path over the last six years, which includes selling the company’s remaining 49.7% interest in plant-based ingredient formulator Primient to KPS Capital Partners for US$350 million in June. 

Tate & Lyle is focusing on consumer demand for healthier, tastier and more sustainable food and drink.In 2010, the company sold its sugar business (EU operations), including the Lyle’s Golden Syrup brand, to American Sugar Refining, ending its long association with refined sugar production.

And now, CP Kelco’s acquisition combines two “highly complementary businesses” — Tate & Lyle’s sweetening, mouthfeel and fortification solutions, and CP Kelco’s pectin and speciality gums portfolio — to create a “leading, global speciality food and beverage solutions business.”

In April, CP Kelco completed a US$60 million expansion in production capacity for its citrus fiber product line, based on strong customer demand and market potential.

“By joining forces with Tate & Lyle, we can create an ingredient innovation powerhouse — one that’s truly committed to meeting consumer and market needs with a unique portfolio of sustainable solutions and our deep technical and applications expertise,” Didier Viala, president of CP Kelco, said in a previous statement.

Additionally, Tate & Lyle expects the purchase to accelerate R&D and innovation by combining the companies’ scientific, technical and applications expertise to develop new ingredients and solutions.

Increasing speed-to-market with AI

According to chief executive Nick Hampton, the company is turning to AI to gain faster access to higher-quality data and deliver ingredients to its customers.

“Our scientists in the US are using AI for predictive modeling of sensory and other data to develop targeted recipes for customers, while in our lab in Singapore, we’ve installed a new robotics system with predictive modeling capabilities which can run characterisation tests ten times faster than our old system,” reads his statement in the company’s 2024 annual report.

Tate & Lyle’s recent transformation focuses on customers, categories and increased investments in innovation, says chief executive Nick Hampton, in the company’s annual report.“The system enables our scientists to assess the chemistry, performance and customer benefits of new mouthfeel solutions with much greater efficiency. And, while this new technology is located in Singapore, it can be used remotely by our other labs across the world to support our customers,” he explains.

Broadening ingredient portfolio

The proposed buyout expands Tate & Lyle’s offering in its large (US$19 billion) and fast-growing (6% CAGR) speciality F&B ingredients addressable market, underscores the company, which targets a revenue growth of 4% - 6% per annum by March 31, 2028 according to its 2024 annual report.

The company aims to achieve this through industry growth due to heightened consumer demand for healthier, tastier and more sustainable food and drink. It will also leverage complementary portfolios, platforms and categories to accelerate growth. 

It also aims to improve capabilities through a rise in innovation and “solution selling to customers.”

Meanwhile, the management expects to deliver a “slightly lower” revenue than the prior year and EBITDA growth of between 4% and 7%.