LONDON – Tate & Lyle PLC has reached an agreement to sell a controlling stake in a new company and its subsidiaries (NewCo) to KPS Capital Partners, LP. NewCo comprises the Primary Products business of Tate & Lyle in North America and Latin America and its interests in the joint ventures Almidones Mexicanos SA de CV and DuPont Tate & Lyle Bio-Products Company, LLC. Under the agreement, Tate & Lyle and KPS will each own 50% of NewCo, and KPS will have control of the board of directors and operations.

The transaction values ​​NewCo at approximately $ 1.7 billion, equivalent to a multiple of 5.1 times EBITDA for the year ended March 31. Tate & Lyle expects to receive gross cash proceeds of approximately $ 1.3 billion, or net cash proceeds of approximately $ 1.2 billion after usual adjustments and transaction costs. Following the completion of the transaction, the board of directors expects approximately $ 700 million to be returned to Tate & Lyle shareholders through a special dividend and associated share consolidation. .

The proposed transaction creates two stand-alone businesses. Tate & Lyle will be repositioned as a global food and beverage solutions company focused on fast-growing specialty markets. NewCo will position itself as a supplier of products of plant origin for the food and industrial markets.

Tate & Lyle’s Primary Products business produces nutritious sweeteners, industrial starches and acidulants. NewCo’s operations will include wet corn mills in Decatur, Illinois; Lafayette, Indiana; and Loudon, Tennessee; acidulant factories in Dayton, Ohio, and Duluth, Minn., and Santa Rosa Brazil; 50% of the interests in the joint ventures Almex in Guadalajara, Mexico, and Bio-PDO in Loudon; and a network of grain elevators and bulk transfer stations in North America. The European operations of Primary Products, which represented approximately 5% of Primary Products revenue in the fiscal year ended March 31, are not included in NewCo and will remain with Tate & Lyle. In the fiscal year ended March 31, NewCo generated revenues of £ 1.7 billion ($ 2.01 billion) and adjusted operating profit of £ 165 million ($ 195.56 million). dollars) on a pro forma basis.

The transaction is expected to close in the first quarter of 2022 and is subject to Tate & Lyle shareholder approval, antitrust clearances and other customary conditions.

“Today’s announcement represents the next phase in the evolution of Tate & Lyle,” said Nick Hampton, CEO of Tate & Lyle. “Our one strong company will grow into two stronger companies, both able to pursue exciting new growth opportunities in their respective markets.

“Building on the strong platform established over the past three years, the proposed transaction will transform Tate & Lyle into a goal-driven global food and beverage solutions company, serving faster growing specialty markets. . With our new focus and increased investment in R&D, innovation and solution development, we will be able to dramatically improve the way we serve our customers and accelerate our growth. Our in-depth scientific expertise, unique product portfolio, and cutting-edge technical capabilities in sweetening, mouthfeel and fortification position us uniquely to benefit from growing consumer demand for low-cost foods and beverages. sugar, calorie and fat content, and with added fiber. With the pandemic accelerating the trend towards healthier eating, now is the time to focus our business on capturing that growth. “

KPS Capital Partners is a global private equity firm headquartered in New York, controlling capital investments in companies across various industries. The companies in its portfolio generate nearly $ 11 billion in annual revenues and operate 149 manufacturing plants in 22 countries with more than 35,000 employees.

“KPS and Tate & Lyle have a 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,” said Michael Psaros, co-founder and managing partner of KPS Capital Partners. . “KPS believes that Primary Products is a superior investment opportunity and that there is a tremendous opportunity to significantly increase revenues, productivity and profitability. We look forward to working with Primary Products’ existing leadership team and their employees to leverage the formidable platform they have established and drive future growth.