Tate & Lyle Surges After FT Reports Advent Is Preparing Bid – BNN Bloomberg

(Bloomberg) — Ingredients company Tate & Lyle Plc surged after the Financial Times reported that buyout group Advent International is preparing a takeover bid.

Shares in the London-listed supplier to food producers rose more than 12% on the report, giving the company a market capitalization of about £3.2 billion ($4.2 billion). 

Tate & Lyle helps food and drink manufacturers remove sugar and fat from products by replacing them with alternatives that replicate the taste and feel. The company, originally a sugar refiner, makes ingredients such as sweeteners, fibers and stabilizers for products ranging from ice cream and baked goods to soups, sauces and fizzy soda. 

There’s been a wave of M&A in the ingredients sector, driven by a push to create companies that can provide a full range of smell, function and taste ingredients for ‘Big Food’ clients like Nestle SA and Unilever Plc. Chemicals company Royal DSM NV and Swiss ingredients maker Firmenich International SA merged last year to become the largest producer of flavors and fragrances.

Tate & Lyle itself is in the process of buying ingredients maker CP Kelco for $1.8 billion, a US maker of speciality ingredients sourced from a wide range of natural products like lily pads, orange peel and seaweed and Xanthan gum. 

UK companies are increasingly attractive to suitors amid cheap valuations, with Royal Mail Group, drinks maker Britvic Plc and packaging firm DS Smith Plc among the recent targets. Last month, Colorado-based AngloGold Ashanti Ltd. agreed to buy gold miner Centamin Plc. As the pound becomes weaker on expectations of interest rate cuts, more take-privates of UK firms are possible. 

Spokespeople for Advent and Tate & Lyle declined to comment. 

–With assistance from Swetha Gopinath and Paul Jarvis.

(Updates with further context, adds no comment from Advent.)

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