Tate & Lyle global restructure enables key new product development focus
Tate & Lyle has devised a key restructuring move to enable it to offer greater focus as a speciality food and beverage solutions business, focused on markets including confectionery and bakery, reports Neill Barston.
Under the terms of the deal, it has agreed to sell a controlling stake in a fresh company (NewCo) that it is creating and its subsidiaries, comprising its primary products business in the US and Latin America, as well as its ‘Almex’ and bioproducts enterprise to KPS Capital Partners.
Tate & Lyle and KPS will each own 50% of NewCo with KPS having Board and operational control, which the business believes will give it greater potential to refine its food sector offerings under fully separated activities, and tap into a growing international market for healthier product ranges.
As the company noted, the move also substantially lowers its exposure to commodities markets and bulk ingredients in the US, as well as strengthening its position as an attractive partner within the speciality sector, and enables greater capacity to focus on developing new market solutions.
Nick Hampton, Chief Executive of Tate & Lyle, believed its restructuring initiative represented a key development in its drive for continued global growth. He said: “Our one strong company will become two stronger businesses, both in a position to pursue new and exciting growth opportunities in their respective markets.
“Building on the strong platform established over the last three years, the proposed transaction will transform Tate & Lyle into a purpose-led, global food and beverage solutions business, serving faster growing speciality markets. With our new focus and a step-up in R&D investment, innovation and solutions development, we will be able to significantly enhance how we serve our customers, and accelerate growth. Our deep scientific expertise, unique product portfolio and leading technical capabilities in sweetening, mouthfeel and fortification, position us very well to benefit from growing consumer demand for food and drink that is lower in sugar, calories and fat, and with added fibre. With the pandemic accelerating the trend towards healthier food, now is the right time to focus our business on capturing this growth.
“We have been very impressed with KPS and are excited to partner with them in the next phase of the development of the Primary Products business. KPS has proven expertise in managing and creating value from large manufacturing businesses, and we look forward to working with them under the long-term agreements we have established to provide supply security and economic protection to both businesses, and to jointly benefit from cash dividends and future value creation,” explained the CEO, who said that it would lead to an ‘exciting future’ for the company.
Michael Psaros, Co-Founder and Managing Partner of KPS Capital Partners, shared his enthusiasm for the move, which he felt would open up significant opportunities.
He added: “KPS is excited to make a controlling investment in Primary Products and is honoured to partner with Tate & Lyle for many years to come. KPS and Tate & Lyle have complete alignment of interests and have cemented a partnership based on shared values such as the safety of our respective employees and a demonstrated commitment to sustainability.
“KPS believes that Primary Products is a superior investment opportunity and that there is a tremendous opportunity to materially increase revenues, productivity and profitability. We look forward to working with the existing Primary Products management team and its employees to build on the great platform they have established and drive future growth.”
