The companies will also set up a plant-based products venture called NewCo, with each owning a 50% share
Tate & Lyle has entered an agreement to sell a controlling stake of its Primary Products business to KPS, in addition to its interests in joint ventures with Almex and DuPont Tate & Lyle Bio-Products Company.
As part of the agreement, the companies will set up NewCo, a supplier of plant-based products for the food and industrial markets, and will own 50% each, with KPS having board and operational control.
20-year agreements have been established between Tate & Lyle and new company to provide supply security and economic protection over the food & beverage products made in NewCo’s facilities, and to ensure continued alignment of objectives between the two companies. 75% of Tate & Lyle’s revenue in 2020, the company says, was generated from manufacturing facilities that will remain under its own control.
The companies predict NewCo will generate significant and steady cash flow with the ability to pay meaningful dividends over time to Tate & Lyle and KPS.
Completion is expected in the first quarter of the 2022 calendar year subject to customary conditions.
Tate & Lyle says the move is aimed to re-position the company as a “global food and beverage solutions business focused on growing speciality markets” which will be followed by a step up in R&D investment into healthier food and beverage products, and an increased focus on supporting and strengthening existing customer relationships.
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.”
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.”