Food and beverage company Tate and Lyle has acquired the global pectin and gums business CP Kelco for almost $2bn as it continues its quest to become a world leader in “mouthfeel” solutions.
The London-listed firm purchased the Atlanta-based business from its current owner J.M. Huber Corporation for $1.8bn (£1.4bn) in a move that will see it take control of its three divisions in US, China and Denmark.
Tate and Lyle said it expects the acquisition to generate revenue synergies of up to 10 per cent of CP Kelco’s revenue over the medium term and targeted run-rate cost synergies of at least $50m (£40m) by the end of the second full financial year.
Over the last six years the sweetener company has been executing a “major strategic transformation” to become the go-to partner of choice for health food and drink businesses looking for “speciality solutions”.
It said the buyout would position it as a “leader in mouthfeel, a critical driver of customer solutions” and strengthen its expertise across its three core platforms of sweetening, mouthfeel and fortification.
Tate and Lyle’s CEO Nick Hampton said: “A combination with CP Kelco is the perfect fit with Tate & Lyle’s growth-focused strategy and purpose. Together, we will have a compelling customer proposition.
“With our leading portfolio of speciality ingredients and a world-class team of food science experts, we will be uniquely placed to provide our customers with the solutions they need to meet growing consumer demand for healthier, tastier and more sustainable food and drink.
“We’ve been collaborating with CP Kelco on innovation projects for many years and are very aware of their excellent products and the outstanding capabilities of their people.
“We are excited about the opportunities the combination will create for customers across the world, and the opportunities for employees in both companies to develop their careers across a broader global business.
“Following on from the announcement of the proposed sale of our remaining interest in Primient last month, the proposed combination with CP Kelco represents a significant acceleration of our growth-focused strategy.
“It creates a leading, global speciality food and beverage solutions business, ideally placed to benefit from the structural trends towards more plant-based, clean-label and sustainable ingredients and solutions.
“The growth potential of the proposed combined business is significant and we look forward to the future with confidence and excitement.”
CP Kelco’s president Didier Viala said: “We are delighted to be joining with Tate and Lyle to create a leading and differentiated speciality food and beverage solutions business.
“CP Kelco and Tate and Lyle are both highly customer-focused businesses with a shared passion for science and innovation.
“With our complementary portfolio and deep technical expertise, we will bring new value to our customers and new opportunities for our employees. This is an exciting time for our combined businesses.”