KPS agrees to carve out operations from Tate & Lyle in $1.7b deal

KPS and Tate & Lyle will each own about 50 percent of a newly created entity that will acquire the operations and interests. 

KPS Capital Partners agreed to carve out a controlling stake in the primary products business in North America and Latin America of Tate & Lyle, as well as its interests in Almidones Mexicanos and DuPont Tate & Lyle Bio-Products Co. joint ventures. KPS would acquire the various components of the business for an enterprise value of $1.7 billion. KPS and Tate & Lyle will each own about 50 percent of a newly created entity that will acquire the operations and interests.

Press Release

KPS Capital Partners, LP (“KPS”) announced today that it has entered into a definitive purchase agreement with Tate & Lyle PLC (“Tate & Lyle”) (LSE: TATE.L) to acquire a controlling stake in its Primary Products business in North America and Latin America and its interests in the Almidones Mexicanos S.A de C.V and DuPont Tate & Lyle Bio-Products Company, LLC joint ventures (collectively, the “Primary Products Business” or the “Company”), through a newly formed company (“NewCo”), for an enterprise value of $1.7 billion. KPS and Tate & Lyle, through affiliates, will each own approximately 50% of NewCo with KPS having Board of Directors and operational control. Completion of the transaction is expected in the first quarter of 2022 and is subject to customary closing conditions and approvals.

The Primary Products Business is a leading provider of nutritive sweeteners, industrial starches, acidulants and other corn-derived products in North America and Brazil. Founded in 1906 as A.E. Staley Manufacturing Co., the Primary Products Business has an over 100-year history of producing corn-derived products in the United States. The Company produces corn-derived products for a diverse set of end-uses including carbonated beverages, confectionery products, packaging applications and animal feed, among others, and is proud to serve some of the world’s most recognizable food and beverage brands. With approximately 1,700 employees across six manufacturing facilities in the United States and Brazil, the Primary Products Business generates annual revenue of approximately $2.3 billion.

Michael Psaros, Co-Founder and Co-Managing Partner of KPS, said, “KPS is excited to make a controlling investment in the Primary Products Business and is honored to partner with Tate & Lyle. KPS and Tate & Lyle have complete alignment of interests and have cemented a partnership based on shared values such as the safety of our employees and a demonstrated commitment to sustainability.

“Our investment in NewCo will create a leading, independent and focused manufacturer of critical corn- derived ingredients for both food and industrial markets. The size and scale of NewCo, and the tremendous growth opportunities made available by serving as a critical supplier to the world’s preeminent food, beverage and industrial companies, forms the foundation of a tremendous investment platform. We will leverage our successful, multi-decade experience of investing in process industries, our commitment to manufacturing excellence and global network to drive increases in revenues, productivity and profitability.

We intend to work closely with the management team of the Primary Products Business to accelerate growth opportunities by making substantial investments in NewCo’s assets and operations, while also pursuing synergistic add-on acquisitions. We will invest in research and development in close cooperation with customers to introduce new products and product categories, in order to capitalize on long-term trends such as the transition to a more plant-based diet by consumers worldwide.”

Nick Hampton, Chief Executive Officer of Tate & Lyle, said, “We have been very impressed with KPS and are excited to partner with them in the next phase of the development of the Primary Products Business. KPS has proven expertise in managing and creating value in large manufacturing businesses, and we look forward to working with them under the long-term agreements we have established to provide supply security and economic protection to both the Primary Products Business and Tate & Lyle’s retained businesses.”

Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as legal counsel to KPS and its affiliates. Barclays is acting as financial advisor to KPS. Debt financing to support the transaction is being led by Barclays, BNP Paribas, Goldman Sachs & Co. LLC, Rabobank and Wells Fargo.

About the Primary Products Business

The Primary Products Business is a leading provider of nutritive sweeteners, industrial starches, acidulants and other corn-derived products in North America and Brazil. Founded in 1906 as A.E. Staley Manufacturing Co., the Primary Products Business has an over 100-year history of producing corn-derived products in the United States. The Company produces corn-derived products for a diverse set of end-uses including carbonated beverages, confectionary products, packaging applications and animal feed, among others, and is proud to serve some of the world’s most recognizable food and beverage brands. With approximately 1,700 employees across six manufacturing facilities in the United States and Brazil, the Primary Products Business generates annual revenue of approximately $2.3 billion.

About Tate & Lyle PLC

Tate & Lyle PLC is a leading global provider of food and beverage ingredients and solutions. Tate & Lyle has an over 160-year history of ingredient innovation, and partners with customers to provide consumers with healthier and tastier choices when they eat and drink. Through its expertise in sweetening, mouthfeel and fiber fortification, Tate & Lyle’s Food & Beverage Solutions business develops solutions which reduce sugar, calories and fat, add fiber and provide texture and stability in categories including beverages, dairy, bakery, soups, sauces and dressings. Tate & Lyle’s purpose is Improving Lives for Generations by supporting healthy living, building thriving communities and caring for the planet. For more information, visit www.tateandlyle.com.

About KPS Capital Partners

KPS, through its affiliated management entities, is the manager of the KPS Special Situations Funds, a family of investment funds with approximately $12.8 billion of assets under management (as of March 31, 2021). For nearly three decades, the Partners of KPS have worked exclusively to realize significant capital appreciation by making controlling equity investments in manufacturing and industrial companies across a diverse array of industries, including basic materials, branded consumer, healthcare and luxury products, automotive parts, capital equipment and general manufacturing. KPS creates value for its investors by working constructively with talented management teams to make businesses better, and generates investment returns by structurally improving the strategic position, competitiveness and profitability of its portfolio companies, rather than primarily relying on financial leverage. The KPS Funds’ portfolio companies have aggregate annual revenues of approximately $13.5 billion, operate 156 manufacturing facilities in 23 countries, and have approximately 40,000 employees, directly and through joint ventures worldwide. The KPS investment strategy and portfolio companies are described in detail at www.kpsfund.com.