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Advent International is preparing a takeover offer for the UK’s Tate & Lyle that would mark private equity’s latest attempt to acquire a London-listed group.
The US-based buyout firm is in the early stages of its bid preparations, according to two people with direct knowledge of the matter, who cautioned there was no certainty that a firm offer would be made.
Advent has yet to propose an offer, the people added, but if it were made it would exceed Tate & Lyle’s £2.8bn market value.
After the Financial Times first reported the bid preparations on Wednesday, shares in Tate & Lyle rose 12.6 per cent to 839p, increasing its market value to £3.2bn. Shares closed up 8.3 per cent at 807p.
Takeover interest in UK companies has surged this year as depressed valuations entice overseas buyers and expectations that interest rates have peaked restore confidence in dealmaking. Targets have included BHP’s failed pursuit of Anglo American and Czech billionaire Daniel Křetínský’s deal for Royal Mail. A consortium of private equity funds led by CVC Capital Partners have agreed a takeover of Hargreaves Lansdown.
An approach would come at an inconvenient time for Tate & Lyle, which is in the process of making its own purchase, having agreed to buy pectin and speciality gums provider CP Kelco for $1.8bn.
Tate & Lyle was once the global leader in sugar, but has over the past two decades pivoted away from bulk ingredients to specialised ingredient solutions.
The 165-year-old company has capitalised on the consumer backlash against ultra-processed food and growing regulatory pressure on food and beverage companies to improve the nutritional profile of their products through reformulation.
It offloaded its historic sugar business in 2010. In 2021 it sold a controlling stake in its commercial sweeteners division in the Americas, which generated the majority of its revenues, to private equity group KPS Capital Partners for $1.3bn. It offloaded its remaining stake in May this year.
The former sugar giant is now focused on helping food companies to reduce the sugar, salt and fat content of food like biscuits and fizzy drinks, and to offer “clean labels” — packaging that indicates trustworthy natural products, with shorter ingredients lists.
“I see [the backlash] as a big opportunity for our business,” chief executive Nick Hampton said after the CP Kelco deal was announced in June.
“It’s hard to argue that a lot of ultra-processed food sold today is nutritionally balanced . . . the acquisition is about extending capability and therefore making us a better partner for customers.”
Hampton added that the deal would help it expand its “mouthfeel” solutions — the combination of taste and texture that can make products healthier without altering the consumer’s experience.
The acquisition adds approximately 30 per cent to the group’s revenues.
Tate & Lyle reported a 2 per cent decline in revenues to £1.6bn in the year to March, which it said was a result of depressed consumer demand. Earnings before interest, taxes, depreciation and amortisation rose 7 per cent to £328mn.
Representatives for Advent and Tate & Lyle declined to comment.
Additional reporting by Alexandra Heal
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