Tate & Lyle goes from one lump to two: UK company to split after US private equity firm swoops
A break-up of Tate & Lyle is under way after a US private equity firm took a controlling stake in its sweetener division.
The 162-year-old British company will be split into two, with control of the larger of the firms sold to American buyout firm KPS Capital Partners for £940million.
Tate & Lyle, best known for the sugar refining business that it sold off in 2010, will retain a 50 per cent stake but lose control of the company’s operations and board.
Break-up: Tate & Lyle will be split into two, with control of the larger of the firms sold to American buyout firm KPS Capital Partners for £940m
The sweeteners division, which also makes industrial starches and animal nutrition products, generates the majority of Tate & Lyle’s £2.9billion annual revenue.
The listed company left behind will focus entirely on its higher growth food and drink solutions business, which helps the likes of Cadbury and Nestle replace sugar, salt and fats in their products.
The deal is the latest example of deep-pocketed private equity firms coming in from abroad to pick up under-valued UK companies.
The board expects to return £500million to shareholders as a special dividend and retain the remainder to strengthen the balance sheet and give firepower for investment.
Shares crept up 0.03 per cent, or 0.2p, to 762.4p. Chief executive Nick Hampton said the deal means that ‘one strong company will become two stronger businesses, both in a position to pursue new and exciting growth opportunities in their respective markets’.
He added: ‘With the pandemic accelerating the trend towards healthier food, now is the right time to focus our business on capturing this growth.’
Tate & Lyle traces its roots back to 1859 when Henry Tate went into partnership with John Wright, a sugar refiner based at Manesty Lane, Liverpool.
His business merged with Bernard Lyle & Sons in 1921 to create Tate & Lyle.
In 2010 it sold its sugar business, including Lyle’s Golden Syrup, to American Sugar Refining, ending its long association with refined sugar.
In May Tate & Lyle, which has 4,250 staff, reported that profits had increased by 6 per cent to £335million for the year to March, after revenues rose by 1 per cent to £2.8billion thanks to increased demand for healthier food and drink products to be consumed at home.
KPS Capital Partners, headquartered in New York, is best-known as the owner of sports equipment manufacturers Life Fitness and Taylormade, the golf clubs used by Tiger Woods.
It has £9.2billion of assets under management, and its portfolio of companies currently generate nearly £7.9billion in annual revenue and employ 35,000 staff worldwide.