Source: Sharecast
The ingredients specialist, which was founded in 1859 and joined the London market in 1935, is being acquired for 595p per share in cash and dividends of up to 20p share. It values the business at £2.7bn, with an implied enterprise value of £3.7bn, and represents a 58.7% premium to the closing share price on 13 May, the last day of trading before the takeover talks were first disclosed.
As at 0930 BST, the FTSE 250 stock had put on 13% at 556.5p.
Splenda-owner Tate & Lyle said the deal would create a business with "even greater potential".
David Hearn, chair, said: "Over the last few years, Tate & Lyle has been successfully repositioned as a leading global speciality food and beverage solutions business aligned to growing consumer demand for healthier, more nutritious and sustainable food and drink.
"We believe the next chapter with Ingredion will create a business with even greater potential, greater scale and increased investment in innovation in support of customers."
Jim Zallie, chief executive of Ingredion, said the tie-up would generate "significant value for all stakeholders", adding: "Combining Ingredion and Tate & Lyle’s complementary portfolios creates a global leader in ingredient solutions with the expertise and geographic reach to help shape the future of food."
Tate & Lyle started as a Liverpool-based sugar refiner and went onto become a global leader. However, it sold its sugar business - including Lyle’s Golden Syrup - well over a decade ago and now focuses on sweetening, mouthfeel and fortification ingredients and solutions.
The companies acknowledged that despite "strong, fundamental long-term growth drivers" for the sector, the operating environment for ingredients companies had deteriorated over the last year, "with consumer sentiment weakening across all major regions".
Tate & Lyle is a stalwart of the London market. One of longest-serving members of the London Stock Exchange, it joined as an original founder constituent of the FT-30.
The sale to Ingredion, which will be implemented by a scheme of arrangement, still requires shareholder approval.
However, Dan Coatsworth, head of markets at AJ Bell, said: “Having secured the agreement of the board, a cash bid at a chunky premium looks like it could be enough get a deal over the line. Shareholders might relived to exit after a disappointing period affected by weak demand, mounting costs and the impact of weight-loss drugs.
“A successful takeover represents another loss to the London market as it struggles to attract substantial new listings to replace the names which are steadily disappearing from its ranks.”
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