Shares of Tate & Lyle Plc were gaining around 14 percent on the London Stock Exchange after the British sweetener and food solutions firm announced Monday its agreement to a 595 pence per share all-cash deal to be bought by U.S. food ingredients maker Ingredion Inc. The cash consideration values Tate & Lyle at around 2.7 billion pounds or $3.6 billion, with an implied enterprise value of around 3.7 billion pounds or $5 billion.
The transaction is expected create a specialty ingredient solutions provider, and broaden Ingredion's specialty ingredients platform across texturants, sugar reduction, and fortification.
The deal is projected to be accretive to Ingredion's its adjusted earnings per share in the first year after completion, and to enhance the long-term growth profile and earnings potential of the combined group.
David Hearn, chair of Tate & Lyle said, "Over the last few years, Tate & Lyle has been successfully repositioned as a leading global specialty food and beverage solutions business aligned to growing consumer demand for healthier, more nutritious and sustainable food and drink.... Looking forward, we believe the next chapter with Ingredion will create a business with even greater potential, greater scale, and increased investment in innovation in support of customers."
Under the terms, Tate & Lyle shareholders will receive 595 pence per share in cash, a 59 percent premium to the company's closing price on May 13, being the last business day prior to the start of the offer period.
Tate & Lyle shares had climbed significantly on May 14 after Ingredion confirmed its non-binding indicative all-cash offer of 595 pence per Tate & Lyle share.
The company will also be entitled to a final dividend of up to 13.2 pence per share for the year ended March 31, 2026 and an interim dividend of up to 6.8 pence per share for the six months ending Sept 30.
The total value of the cash consideration and permitted dividends would be up to 615 pence per Tate & Lyle Share, representing a headline offer premium of around 64.0 percent to the closing share price on May 13.
The companies now said the acquisition is intended to be implemented by means of a court-sanctioned scheme of arrangement under the UK Act, although Ingredion reserves the right to effect it by way of a takeover offer.
Tate & Lyle said its Board unanimously recommends Ingredion's offer to its shareholders. The acquisition, to be implemented via a UK court-sanctioned scheme of arrangement, is expected to close in the second half of 2027, subject to shareholder and regulatory approvals.
The transaction would deliver annual run-rate cost savings of $130 million by the end of 2030, with one-time costs of about $175 million to achieve the savings.
The deal combines Ingredion's business in texture and sugar reduction with Tate & Lyle's expertise in sweetening, mouthfeel and fortification.
Ingredion said it would fund the deal with cash, new debt and, if needed, a bridge facility. It expects net leverage of about 3.0 times net debt to adjusted EBITDA at close and plans to reduce that to 2.5 times within 18 months.
J.P. Morgan is financial adviser to Ingredion and Hogan Lovells is legal counsel.
Goldman Sachs and Greenhill are joint lead financial advisers to Tate & Lyle, with Bank of America and Citi as joint financial advisers and Linklaters as legal counsel.
On the LSE, shares of Tate & Lyle were gaining 13.6 percent, trading at 558.25 pence.
In pre-market activity on NYSE, shares of Ingredion were up 0.51 percent, trading at $100.49, after closing Friday's regular session 0.52 percent higher.
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