Tate & Lyle sells controlling stake in primary products business to KPS Capital Partners for US$1.7B

US – Tate & Lyle PLC, a leading global provider of food and beverage ingredients and solutions, has entered is selling a controlling stake its Primary Products business in North America and Latin America to KPS Capital Partners. 

The Primary Products Business is a leading provider of nutritive sweeteners, industrial starches, acidulants, and other corn-derived products in North America and Brazil. 

The Company produces corn-derived products for a diverse set of end-uses including carbonated beverages, confectionary products, packaging applications, and animal feed, among others. 

 With approximately 1,700 employees across six manufacturing facilities in the United States and Brazil, the Primary Products Business generates annual revenue of approximately US$2.3 billion. 

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Tate & Lyle had confirmed back in April that it had intentions of selling a controlling stake in its Primary Products unit to a new long-term financial partner, as it looks to focus on its Food and Beverage Solutions arm. 

The Telegraph, which first reported the potential sale, said that the auction could be worth up to £1.2bn (about US$1.45bn) adding that US private equity giants Apollo Global Management and Cerberus had held talks with Tate & Lyle over the sale. 

KPS however seems to have presented a better offer and thus getting its footing its one of Tate & Lyle’s most profitable businesses. 

According to a statement from KPS, the sale of the primary products business for an enterprise value of US$1.7 billion also includes interests in the Almidones Mexicanos S.A de C.V and DuPont Tate & Lyle Bio-Products Company, LLC joint ventures. 

Following the sale, the sold business will be integrated into a new company where KPS and Tate & Lyle, through affiliates, will each own approximately 50% stake with KPS having Board of Directors and operational control. 

“KPS is excited to make a controlling investment in the Primary Products Business and is honored to partner with Tate & Lyle,” said Michael Psaros, Co-Founder and Co-Managing Partner of KPS.  

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“We intend to work closely with the management team of the Primary Products Business to accelerate growth opportunities by making substantial investments in NewCo’s assets and operations, while also pursuing synergistic add-on acquisitions.” 

The investment in the new business entity is expected to create a leading, independent and focused manufacturer of critical corn- derived ingredients for both food and industrial markets. 

The two new partners plan to invest into the newly established entity “to drive increases in revenues, productivity and profitability.” 

“We will invest in research and development in close cooperation with customers to introduce new products and product categories, in order to capitalize on long-term trends such as the transition to a more plant-based diet by consumers worldwide,” Psaros added. 

Completion of the transaction is expected in the first quarter of 2022 and is subject to customary closing conditions and approvals.

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