Tate & Lyle strikes £1.4bn deal to buy US-based ingredients firm CP Kelco
Tate & Lyle has agreed to buy food and drink ingredients business CP Kelco in a roughly £1.4bn deal.
The FTSE 250 firm told investors it will buy the US-based pectin and xanthan gum maker from JM Huber.
Nick Hampton, chief executive of Tate & Lyle, said the combined business will have “significant” growth potential as a result.
It comes after a significant strategic shift by the company under Mr Hampton over the past six years to move towards operations more closely linked to growing consumer trends for healthier and more sustainable food and drink.
Last month, the group sold off its remaining stake in Primient – which makes corn-derived products for carbonated drinks and confectionery – for £279m as part of this strategy.
Tate & Lyle said the fresh deal will accelerate its growth and is expected to “drive stronger revenues” and increase its earning margins over the coming years.
The deal is expected to result in at least £40m worth of cost synergies within two financial years.
The move is due to complete in the final quarter of 2024, Tate & Lyle said.
Mr Hampton said: “Following on from the announcement of the proposed sale of our remaining interest in Primient last month, the proposed combination with CP Kelco represents a significant acceleration of our growth-focused strategy.
“It creates a leading, global speciality food and beverage solutions business, ideally placed to benefit from the structural trends towards more plant-based, clean-label and sustainable ingredients and solutions.”