Private equity firm Advent International is preparing a takeover offer for UK-based food and beverage ingredients maker Tate & Lyle, the Financial Times reported, citing two people familiar with the discussions.
Shares in Tate & Lyle, which supplies ingredients for Splenda, the sweetener in Diet Coke and other sugar-free drinks, jumped 11.5% to a near eight-year high on the news on Wednesday (16 October).
The US-based buyout firm is in the early stages of its bid preparations, according to sources, who cautioned there was no certainty that a firm offer would be made, the report added.
The offer could value Tate & Lyle above its £2.8 billion ($3.65 billion) market capitalisation, according to the Financial Times.
Both Tate & Lyle and Advent declined to respond to Reuters' requests for comments.
Tate & Lyle in June agreed to buy US-based CP Kelco for $1.8 billion to boost its speciality ingredients business and tap demand for plant-based products.
Analyst Comment
Dan Coatsworth, investment analyst at AJ Bell, stated “It feels like Advent – if the rumours are correct – spotted an opportunity to run the numbers on Tate & Lyle while it was busy bedding in the CP Kelco deal.
“Pouncing on a business when it is distracted is par for the course with private equity and the big question now is whether Advent is prepared to offer a fair price to win over shareholders.”
Earlier this year, the food ingredients maker forecast its annual revenue to come in 'slightly' below year-ago levels, as softer demand and persistent de-stocking by customers weighed.
News by Reuters, additional reporting by ESM.
