Tate & Lyle to acquire CP Kelco for US$1.8B 

UK – Tate & Lyle has announced a definitive agreement to acquire CP Kelco, a leading provider of pectin, specialty gums, and other nature-based ingredients, from J.M. Huber Corporation.  

The acquisition, valued at US$1.8 billion on a cash-free, debt-free basis, aims to enhance Tate & Lyle’s product offerings and market reach. 

Under the agreement, J.M. Huber Corporation will retain a 16 percent shareholding in the combined Tate & Lyle and CP Kelco entity, Tate & Lyle PLC, upon the completion of the transaction.  

Additionally, Huber will hold two seats on the company’s board of directors. 

The merger of Tate & Lyle’s expertise in sweetening, mouthfeel, and fortification with CP Kelco’s proficiency in pectin and specialty gums is expected to significantly bolster the company’s capabilities across its core product categories.  

The combined entity will be better positioned to capitalize on the increasing consumer demand for healthier, sustainable, and tastier food and beverage products. 

Nick Hampton, CEO of Tate & Lyle said, “A combination with CP Kelco is the perfect fit with Tate & Lyle’s growth-focused strategy. Together, we will have a compelling customer proposition to meet the growing global demand for plant-based, clean-label, and sustainable ingredients and solutions.” 

The transaction is projected to drive substantial revenue growth and improve adjusted EBITDA margins for Tate & Lyle in the coming years.  

The company anticipates realizing at least US$50 million in annual cost synergies by the end of the second full financial year following completion, with the potential for an additional 10 percent in revenue synergies over the medium term. 

Didier Viala, President of CP Kelco, highlighted the strategic fit of the two companies, stating, “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 transaction is expected to be accretive to Tate & Lyle’s adjusted earnings per share, including cost synergies, in the second full financial year post-completion, with strong accretion expected thereafter.  

Furthermore, the return on invested capital is anticipated to exceed the company’s weighted average cost of capital within five years. 

To finance the acquisition, Tate & Lyle will use a combination of new and existing debt facilities and will issue 75 million new ordinary shares to J.M. Huber Corporation

The proposed transaction, pending customary regulatory approvals, is expected to close in the fourth quarter of 2024. 

In conjunction with the acquisition announcement, Tate & Lyle has also commenced a US$270 million share buyback program, initially planned following the sale of its remaining interest in Primient.