Tate & Lyle PLC (TATE.L,TATYY.PK), a supplier of food and beverage ingredients, announced Monday its agreement to sell a controlling stake in its Primary Products business to KPS Capital Partners, LP.
The company will sell the stake in Primary Products business in North America and Latin America and its interests in the Almidones Mexicanos S.A de C.V or Almex and DuPont Tate & Lyle Bio-Products Company, LLC joint ventures.
KPS Capital will acquire the stake through a newly formed company or NewCo, for an enterprise value of $1.7 billion or about 1.2 billion pounds. KPS and Tate & Lyle, through affiliates, will each own approximately 50 percent of NewCo with KPS having Board of Directors and operational control.
Completion of the transaction is expected in the first quarter of 2022 and is subject to customary closing conditions and approvals.
In the transaction, Tate & Lyle expects to receive gross cash proceeds of around $1.3 billion or about 0.9 billion pounds. This results in net cash proceeds of approximately $1.2 billion after customary adjustments and transaction costs.
The deal will create two standalone businesses, such as Tate & Lyle and NewCo. Each companies will focus on their respective strategies and capital allocation priorities.
Tate & Lyle will be a food and beverage solutions business focused on faster growing speciality markets, while NewCo will provide plant-based products for the food and industrial markets.
Following completion, the Board intends that approximately $0.7 billion to be returned to Tate & Lyle’s shareholders by way of a special dividend and associated share consolidation.
The balance will be retained to strengthen Tate & Lyle’s balance sheet, provide flexibility to invest to accelerate growth and for potential tax arising as a result of the deal.
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