London, UK — Tate & Lyle announced July 12 that it has entered into an agreement to sell a controlling stake in a new company and its subsidiaries (“NewCo”), comprising its Primary Products business in North America and Latin America and its interests in the Almidones Mexicanos S.A de C.V (“Almex”) and DuPont Tate & Lyle Bio-Products Company, LLC (“Bio-PDO”) joint ventures, to KPS Capital Partners, LP (“KPS”) (the “Proposed Transaction”). Tate & Lyle and KPS will each own 50% of NewCo with KPS having Board and operational control.
STRATEGIC RATIONALE FOR TATE & LYLE – FOCUS ON ACCELERATING GROWTH
NewCo will comprise Tate & Lyle’s Primary Products business in North America and Latin America consisting of the following operations:
Primary Products’ European operations, which in aggregate represented approximately 5% of Primary Products revenue in the year ended 31 March 2021, are not included in NewCo and will remain with Tate & Lyle.
In the financial year ended 31 March 2021, on a proforma basis, NewCo generated revenues of £1.7bn and adjusted operating profit of £165m. As at 31 March 2021, NewCo had gross assets of £1.3bn.
KPS CAPITAL PARTNERS, LP
KPS is a leading global private equity firm, headquartered in New York, that makes controlling equity investments in companies across a diverse array of industries. KPS invests exclusively in manufacturing and industrial companies. Its portfolio companies currently generate nearly US$11 billion in annual revenue and operate 149 manufacturing facilities in 22 countries with over 35,000 employees worldwide.
KPS is known for its ability to execute complex corporate carve-out transactions on a global scale, and corporate carve-outs represent over 50% of its platform investments. In 2021, KPS created Speira to acquire the largest aluminum rolling business in Europe from Norsk Hydro and announced that it is acquiring the European Tinplate Packaging business of Crown Holdings, with Crown Holdings partnering with KPS by retaining 20% of the new company. Over the past year, KPS acquired Lufkin Industries from Baker Hughes and Schlumberger’s Rod Lift Business and IKG from Harsco in connection with corporate carve-out transactions.
Nick Hampton, Chief Executive of Tate & Lyle, commented:
“Today’s announcement represents the next phase in the evolution of Tate & Lyle. 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.
The proposed transaction represents an ambitious and bold step forward for Tate & Lyle. Driven by our purpose, all our people, expertise and investment will be dedicated to growing our global food and beverage solutions business and creating healthier food and drink. An exciting future lies ahead for Tate & Lyle."
Michael Psaros, Co-Founder and Managing Partner of KPS Capital Partners, said:
“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.”