Tate & Lyle to acquire CP Kelco for US$1.8bn to form global specialty F&B giant

20 Jun 2024 --- Tate & Lyle has agreed to acquire the entire issued share capital of CP Kelco, a leading provider of pectin, specialty gums and other nature-based ingredients, from J.M. Huber, for a total implied consideration of US$1.8 billion.

The move would create a leading global speciality F&B solutions business and is expected to “drive stronger revenue growth and significant adjusted EBITDA margin improvement over the next few years,” says the company.

The proposed deal comes amid Tate & Lyle’s ongoing strategic transformation, which sees the company working toward becoming “a growth-focused specialty food and beverage solutions business” aligned to attractive structural and growing consumer trends for healthier, tastier and more sustainable F&B.

Tate & Lyle’s transformation has so far included increased investment in innovation and solutions and a sharper focus on customers and key categories. 

The company has also bolstered sweetening, mouthfeel and fortification platforms through new product development and acquisitions. This transformation was completed with the announcement of the proposed sale of Tate & Lyle’s remaining interest in Primary Products Investments last month.

Synergies and strategic rationale 
Tate & Lyle says the proposed transaction is expected to deliver significant synergies, with “targeted run-rate cost synergies of at least US$50 million” by the end of the second full financial year post-completion.

The combination is also expected to generate revenue synergies of up to 10% of CP Kelco’s revenue over the medium term.

The acquisition will strengthen the company's sweetening, mouthfeel and fortification platforms, says Nick Hampton, CEO of Tate & Lyle.The proposed transaction combines two highly complementary businesses with Tate & Lyle, recognized as leader in sweetening, mouthfeel and fortification, and CP Kelco, as a key player in pectin and speciality gums.

The combined product portfolio, technical expertise and complementary category offering would significantly enhance Tate & Lyle’s solutions capabilities and increase the opportunity to benefit from growing global consumer demand for healthier, tastier and more sustainable food and drink.

It is also expected to accelerate R&D and innovation through the combination of world-class scientific, technical and applications expertise, driving the development of new plant-based ingredients and solutions.

“A combination with CP Kelco is the perfect fit with Tate & Lyle’s growth-focused strategy and purpose. It significantly strengthens our sweetening, mouthfeel and fortification platforms, enhances our solutions capabilities across our four core categories and unlocks new growth opportunities,” says Nick Hampton, CEO at Tate & Lyle. 

“We’ve been collaborating with CP Kelco on innovation projects for many years and are very aware of their excellent products and the outstanding capabilities of their people. We are excited about the opportunities the combination will create for customers across the world and the opportunities for employees in both companies to develop their careers across a broader global business.”

This follows on from the company’s announcement of the proposed sale of its remaining interest in Primient last month.

“The proposed combination with CP Kelco represents a significant acceleration of our growth-focused strategy. It creates a leading, global speciality F&B solutions business, ideally placed to benefit from the structural trends toward more plant-based, clean label and sustainable ingredients and solutions. The growth potential of the proposed combined business is significant and we look forward to the future with confidence and excitement,” says Hampton.

Didier Viala, CP Kelco president, adds, “CP Kelco and Tate & Lyle are both highly customer-focused businesses with a shared passion for science and innovation. With our complementary portfolio and deep technical expertise, we will bring new value to our customers and new opportunities for our employees. ”

The proposed transaction is subject to certain customary regulatory approvals and is expected to complete in Q4 this year.

By Gaynor Selby