REG - Tate & Lyle PLC - Information - combination Tate & Lyle / CP Kelco

Tate & LyleAnnouncement

03/10/2024 07:00

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RNS Number : 7310G  Tate & Lyle PLC  03 October 2024

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR
FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE
RELEVANT LAWS OF SUCH JURISDICTION

FOR IMMEDIATE RELEASE

3 October 2024

Tate & Lyle PLC

 

('Tate & Lyle')

 

Further information regarding proposed combination of

Tate & Lyle and CP Kelco to create

a leading global speciality food and beverage solutions business

 

On 20 June 2024, Tate & Lyle announced the proposed acquisition of the
entire issued share capital of (i) CP Kelco U.S.; (ii) CP Kelco China; and
(iii) CP Kelco ApS together with each of their respective subsidiaries
(together 'CP Kelco') a leading provider of pectin, speciality gums and other
nature-based ingredients, from J.M. Huber Corporation ('Huber') (the 'Proposed
Transaction' and the 'Initial Announcement'). The Initial Announcement can be
found here
(https://www.tateandlyle.com/sites/default/files/2024-06/rns-combination-tate-lyle-and-cp-kelco-20-june-2024.pdf)
.

Under the terms of the Proposed Transaction Tate & Lyle will acquire CP
Kelco for total implied headline consideration of US$1.8 billion (c.£1.4
billion)(1,2), subject to customary adjustments.

 

On 11 July 2024, the Financial Conduct Authority announced changes to the UK
Listing Rules, which took effect from 29 July 2024 (the 'New Listing Rules').
Under the New Listing Rules, completion of the Proposed Transaction is no
longer required to be conditional on the approval of Tate & Lyle's
shareholders. Accordingly, Tate & Lyle and Huber have agreed that the
condition under the sale and purchase agreement (the 'SPA') to seek approval
for the Proposed Transaction from Tate & Lyle's shareholders will no
longer apply.

 

The Proposed Transaction constitutes a 'significant transaction' for Tate
& Lyle under the New Listing Rules. Tate & Lyle today announces
certain additional information relating to the Proposed Transaction as
required under the New Listing Rules.

 

The Proposed Transaction remains conditional on receipt of certain customary
regulatory approvals. Completion of the Proposed Transaction is expected to
take place before the end of the 2024 calendar year.

 

ADDITIONAL INFORMATION

 

Background

 

Over the last six years, Tate & Lyle has been executing a major strategic
transformation to become a growth-focused speciality food and beverage
solutions business aligned to attractive structural and growing consumer
trends for healthier, tastier and more sustainable food and drink. This
transformation was completed with the announcement on 27 June 2024 of the sale
of Tate & Lyle's remaining interest in Primary Products Investments LLC
('Primient').

 

The Proposed Transaction significantly accelerates Tate & Lyle's strategy
to be a leading and differentiated speciality food and beverage solutions
business, and to become the solutions partner of choice for customers.  It is
expected to drive stronger revenue growth and significant adjusted EBITDA
margin improvement over the next few years.  It is also expected to be
accretive to adjusted earnings per share, including cost synergies only, in
the second full financial year following completion of the Proposed
Transaction, and strongly accretive thereafter.

Strategic rationale for the Proposed Transaction

·  The Proposed Transaction combines two highly complementary businesses -
Tate & Lyle, a leader in Sweetening, Mouthfeel and Fortification, and CP
Kelco, a leader in pectin and speciality gums - to create a leading, global
speciality food and beverage solutions business.

·   Creates a leader in Mouthfeel, a critical driver of customer solutions,
and strengthens Tate & Lyle's expertise across its three core platforms of
Sweetening, Mouthfeel and Fortification.

·    The combined product portfolio, technical expertise and complementary
category offering delivers a compelling customer proposition, significantly
enhancing Tate & Lyle's solutions capabilities and increasing the
opportunity to benefit from growing global consumer demand for healthier,
tastier and more sustainable food and drink.

·    Expands Tate & Lyle's offering in its large (US$19 billion(3)) and
fast-growing (6% CAGR(3)) speciality food and beverage ingredients addressable
market, and unlocks further growth opportunities in its core and adjacent
markets.

·    Accelerates R&D and innovation through the combination of
world-class scientific, technical and applications expertise, driving the
development of new ingredients and solutions.

·    The combination is underpinned by a shared purpose, values and
culture, and a mutual belief in Tate & Lyle's commitment to science,
solutions and society.

Huber will become a long-term shareholder (c.16%)(4) in Tate & Lyle
following completion of the Proposed Transaction. The potential for Huber to
become a long-term shareholder and participate in the future value creation
from the combination of the two businesses was central to unlocking a
transaction. Huber will be entitled to appoint two non-executive directors to
the Tate & Lyle board (the 'Board'), subject to Huber maintaining certain
minimum shareholding thresholds in Tate & Lyle.

 

Financial effects of the Proposed Transaction

·    The Proposed Transaction accelerates the delivery of Tate & Lyle's
strategy to create a higher growth business underpinned by an attractive
financial algorithm, including:

-  Drive revenue growth towards the higher-end of Tate & Lyle's 4%-6% per
annum ambition(5):

o Industry growth: Increasing consumer demand for healthier, tastier and more
sustainable food and drink.

o Broader offering: Accelerate growth from complementary portfolios, platforms
and categories.

o Stronger capabilities: Enhanced capabilities to increase innovation and
solution selling to customers.

-  Drive significant adjusted EBITDA margin improvement over the next few
years:

o Cost synergies: Targeted run-rate cost synergies of at least US$50 million
(£40 million) over the two full financial years following completion.

o Margin improvement: Phased recovery in profitability of CP Kelco.

o Solution selling: Margin accretive solution selling from two or more years
following completion.

-  Target to consistently exceed 75% free cash flow conversion(6).

·    The Proposed Transaction is expected to be accretive to adjusted
earnings per share, including cost synergies only, in the second full
financial year following completion, and strongly accretive thereafter.

·   Return on invested capital (ROIC) now expected to exceed Tate &
Lyle's weighted average cost of capital (WACC) by the fifth full year
following completion.

·   Targeted run-rate cost synergies of at least US$50 million (£40
million) by the end of the second full financial year following completion,
with 50% - 60% (or c.US$25 million) of cost synergies to be realised by the
end of the first full financial year following completion. There is also
significant opportunity to accelerate revenue growth. Tate & Lyle is
targeting revenue synergies of up to 10% of CP Kelco's revenue, to be
delivered by the end of the fourth financial year following completion. The
cost to deliver these synergies is estimated to be around US$75 million.

·  Net debt to EBITDA leverage anticipated to be approximately 2.3x(7) at
the financial year-end following completion, Tate & Lyle remains within
its 1.0x to 2.5x long-term target net debt to EBITDA leverage range with the
capacity and flexibility for further investment.  Strong cash generation is
expected to return net debt to EBITDA leverage to around the mid-point of this
long-term target range by the end of the second full financial year following
completion.

·   No change to Tate & Lyle's existing approach to capital allocation
and dividend policy; Tate & Lyle remains committed to maintaining a strong
and efficient balance sheet.

·   On 20 June 2024 a £215 million (c.US$270 million) share buyback
programme was initiated to return the net cash proceeds from the sale of Tate
& Lyle's remaining interest in Primient to shareholders. To date, as of 2
October 2024, 15.8 million shares at a cost of c.£102 million (c.US$132
million) have been repurchased.

 

Financial information

The gross assets of CP Kelco as at 31 March 2024 amounted to £1,484 million,
with net assets of £1,307 million at the same date (both presented under UK
adopted International Accounting Standards ('UK-adopted IFRS')). For the year
ended 31 March 2024 under UK-adopted IFRS, revenue of CP Kelco was £603
million, adjusted EBITDA was £106 million, and adjusted profit before tax was
£44 million. Adjusted metrics are stated before exceptional items of £11
million and recharges and other intra-group costs from Huber of £9 million.
Operating profit of CP Kelco was £25 million and profit before tax was £24
million. This information has been prepared using the unaudited monthly
management information of CP Kelco, adjusted to UK-adopted IFRS, for alignment
with Tate & Lyle's accounting policies and carve out adjustments have been
applied to adjusted metrics.

Assuming the Proposed Transaction completed on 31 March 2024, it is expected
to increase the net assets of Tate & Lyle by £452 million representing:

·    total assets acquired of £1,303 million (including goodwill and less
cash consideration)

·  total liabilities of £851 million (including liabilities acquired, new
loan facilities drawn down and accrued transaction costs).

 

In estimating the effect of the Proposed Transaction on the net assets(8) of
Tate & Lyle the principal assumptions are: i) the 31 March 2024 unaudited
balance sheet of CP Kelco was extracted from its unaudited management
information, adjusted to UK-adopted IFRS, aligned to Tate & Lyle
accounting policies and translated into British pounds using foreign exchange
rate of £1:US$1.26; ii) purchase consideration of US$1.8 billion is assumed,
consisting of US$1.15 billion in cash from new and existing facilities and
cash resources, and Tate & Lyle ordinary shares representing a value of
US$0.67 billion(9); and, iii) no value has been attributed to the deferred
consideration to be delivered to Huber by Tate & Lyle of up to 10 million
Tate & Lyle ordinary shares, as the amount of shares delivered will be
determined by Tate & Lyle's future share price performance, which is
currently unknown.

An unaudited pro forma statement of profit before tax for continuing
operations has been prepared to illustrate the effect of the Proposed
Transaction on Tate & Lyle's pre-tax financial results for continuing
operations for the year ended 31 March 2024 as if the Proposed Transaction had
occurred on 1 April 2023 being the beginning of the period presented.  This
is included as Appendix 1. This information has been prepared based on the
consolidated income statement of Tate & Lyle for the period ended 31 March
2024 and CP Kelco's unaudited monthly management information for the 12 months
ended 31 March 2024.  CP Kelco's management information has been converted to
IFRS, aligned with Tate & Lyle's accounting policies and presented in
British pounds using the average USD to GBP rate for the 12-month period.
 Pro forma adjustments arising from the combination have also been reflected
as well as the removal of Tate & Lyle's share of the profit of its
Primient joint venture (a discontinued operation).

The unaudited pro forma adjusted EBITDA for the year ended 31 March 2024 for
the combined business was £434 million (see Appendix 1 for the basis of
preparation of the unaudited pro forma financial information and assumptions
applied).

By its nature, the unaudited pro forma statement of profit before tax for
continuing operations addresses a hypothetical situation and, therefore, does
not represent the enlarged group's actual financial results. It may not,
therefore, give a true picture of the enlarged group's financial results nor
is it indicative of the results that may, or may not, be expected to be
achieved in the future. The pro forma financial information has been prepared
for illustrative purposes only and in accordance with Annex 20 of the UK
Prospectus Regulation Rules. The unaudited pro forma statement of profit
before tax for continuing operations does not constitute financial statements
within the meaning of Section 434 of the Companies Act.

 

Trading update

 

Standalone Tate & Lyle (excluding CP Kelco)

 

For the five months ended 31 August 2024 Tate & Lyle is seeing positive
volume momentum, with trading in line with our expectations.

The outlook for the year ending 31 March 2025 is unchanged. Management
continue to expect to deliver in constant currency:

·        Revenue slightly lower than the prior year

·        EBITDA growth of between 4% and 7%.

 

CP Kelco

 

For the eight months ended 31 August 2024, financial performance continues to
stabilise with volume well ahead of the comparative period.

Further Information

Your attention is drawn to the further information contained in Appendix 2
(Risks) and Appendix 3 (Additional Information) of this document.

The whole of this announcement should be read and not solely the information
summarised in the front end of this announcement.

Board's views on the Proposed Transaction

The Board of Tate & Lyle believes that the Proposed Transaction is in the
best interests of Tate & Lyle's shareholders.

-------------------------------------------------------------------------------------------------

1.   Based on GBP:USD foreign exchange rate of £1:US$1.272, as at 5pm BST on
19 June 2024, and a Tate & Lyle share price of 677.0p per share as at
close of trading on the same date, being the latest practical date before the
announcement of the Proposed Transaction.

2.   Excludes deferred consideration of up to 10 million additional Tate
& Lyle ordinary shares to be delivered to Huber approximately two years
post-completion of the Proposed Transaction, subject to performance criteria
based on Tate & Lyle's share price.  For further details see the Initial
Announcement.

3.   Speciality ingredient market, market research data, Tate & Lyle and
BCG analysis; estimate value growth 2022-26; CAGR is compound annual growth
rate.

4.   Based on 401,694,461 shares in issue on 31 March 2024 and including the
75 million Tate & Lyle shares to be issued to Huber at completion of the
Proposed Transaction.

5.   Multi-year ambition to 31 March 2028.

6.   Free cash conversion calculated as: free cash flow before capital
expenditure divided by adjusted EBITDA.

7.   Leverage of 2.3x excludes the impact of any liability required to be
recognised in relation to deferred share consideration.

8.   A fair value assessment of the assets and liabilities acquired,
including a valuation of the intangible assets, as required by IFRS 3, has not
been performed.

9.   Based on Tate & Lyle share price of 669.5p per share as at close of
trading on 2 October 2024 and GBP:USD foreign exchange rate of £1:US$1.327,
as at 5pm BST on the same date.

 

FOR FURTHER INFORMATION PLEASE CONTACT:

 

For Tate & Lyle:

 

Investors and Analysts

Christopher Marsh, VP Investor Relations

Tel: Mobile: +44 (0) 7796 192 688

 

Media

Nick Hasell, FTI Consulting

Tel: Mobile: +44 (0) 7825 523 383

Tel: Office: +44 (0) 203 727 1340

tate@fticonsulting.com (mailto:tate@fticonsulting.com)

 

Greenhill & Co. International LLP

+44 207 198 7400

(Joint Lead Financial Adviser to Tate & Lyle)

Seamus Moorhead

David Wyles

Charlie Stripp

 

Citigroup Global Markets Limited

+44 207 986 0000

(Joint Lead Financial Adviser and Corporate Broker to Tate & Lyle)

Andrew Seaton

Robert Way

Christopher Wren

 

For Huber:

 

Lea Volpe

Vice President, Communications & Community Relations

Tel: Mobile: +1 404 956 4470

ADVISERS

For Tate & Lyle:

In the context of the Proposed Transaction, Greenhill & Co. International
LLP ('Greenhill') is acting as joint lead financial adviser, Citigroup Global
Markets Limited ('Citigroup') is acting as joint lead financial adviser and
Corporate Broker and Linklaters LLP is acting as legal adviser.

 

For Huber:

In the context of the Proposed Transaction, BofA Securities is acting as
financial adviser and Kirkland & Ellis International LLP is serving as
legal counsel to Huber, with White & Case LLP handling FDI and antitrust
filings.

 

IMPORTANT NOTICES

 

Greenhill & Co. International LLP, an affiliate of Mizuho Financial Group,
Inc., which is authorised and regulated in the UK by the Financial Conduct
Authority, is acting as financial adviser for Tate & Lyle and for no one
else in connection with the Proposed Transaction and other matters described
in this announcement, and will not be responsible to anyone other than Tate
& Lyle for providing the protections afforded to clients of Greenhill nor
for providing advice in connection with the Proposed Transaction or any other
matters referred to in this announcement. Neither Greenhill nor any of its
affiliates, directors or employees owes or accepts any duty, liability or
responsibility whatsoever (whether direct or indirect, consequential, whether
in contract, in tort, in delict, under statute or otherwise) to any person who
is not a client of Greenhill in connection with this announcement, any
statement contained herein, the Proposed Transaction or otherwise.

 

Citigroup Global Markets Limited, which is authorised by the Prudential
Regulation Authority and regulated in the UK by the Financial Conduct
Authority and the Prudential Regulation Authority, is acting as financial
adviser for Tate & Lyle and for no one else in connection with the
Proposed Transaction and other matters described in this announcement, and
will not be responsible to anyone other than Tate & Lyle for providing the
protections afforded to clients of Citigroup nor for providing advice in
connection with the Proposed Transaction or any other matters referred to in
this announcement. Neither Citigroup nor any of its affiliates, directors or
employees owes or accepts any duty, liability or responsibility whatsoever
(whether direct or indirect, consequential, whether in contract, in tort, in
delict, under statute or otherwise) to any person who is not a client of
Citigroup in connection with this announcement, any statement contained
herein, the Proposed Transaction or otherwise.

 

Linklaters LLP is acting as legal adviser to Tate & Lyle on the Proposed
Transaction.

 

This announcement is not intended to, and does not constitute or form part of,
and should not be construed as, any offer, invitation, solicitation or
recommendation of an offer to purchase, sell, subscribe for or otherwise
dispose of or acquire any securities or the solicitation of any vote or
approval in any jurisdiction and neither the issue of the information nor
anything contained herein shall form the basis of or be relied upon in
connection with, or act as an inducement to enter into, any investment
activity. No shares are being offered to the public by means of this
announcement. This announcement does not constitute either advice or a
recommendation regarding any securities, or purport to contain all of the
information that may be required to evaluate any investment in Tate & Lyle
or any of its securities and should not be relied upon to form the basis of,
or be relied on in connection with, any contract or commitment or investment
decision whatsoever. Past performance is not an indication of future results
and past performance should not be taken as a representation that trends or
activities underlying past performance will continue in the future.

 

The distribution of this announcement in or from certain jurisdictions may be
restricted or prohibited by the laws of any jurisdiction other than
the United Kingdom. Recipients are required to inform themselves of, and
comply with, all restrictions or prohibitions in such other jurisdictions. Any
failure to comply with applicable requirements may constitute a violation of
the laws and/or regulations of other such jurisdiction.

 

This announcement has been prepared for the purposes of complying with the
applicable law and regulation of the United Kingdom (including the New
Listing Rules and the Disclosure Guidance and Transparency Rules) and the
information disclosed may not be the same as that which would have been
disclosed if this announcement had been prepared in accordance with the laws
and regulations of any jurisdiction outside of the United Kingdom.

 

This announcement is being distributed to all owners of Ordinary shares and
American Depository Receipts. A copy of this announcement can be found on Tate
& Lyle's website at www.tateandlyle.com. A hard copy of this statement is
also available from the Company Secretary, Tate & Lyle PLC, 5 Marble
Arch, London W1H 7EJ.

 

Cautionary Note regarding Forward-Looking Information

 

This announcement may contain certain forward-looking statements, beliefs or
opinions, including statements with respect to Tate & Lyle's business,
financial condition and results of operations. These forward-looking
statements can be identified by the use of words such as "anticipate",
"expect", "estimate", "intend", "will", "may", "project", "plan", "target" and
"believe" and other words of similar meaning in connection with any discussion
of future events. These statements, by their nature, involve risk, uncertainty
and qualifications because they relate to events and depend upon circumstances
that may or may not occur in the future. A number of factors could cause
actual results and developments to differ materially from those expressed or
implied by the forward-looking statements in this announcement and accordingly
all such statements should be treated with caution. There can be no assurance
that any particular forward-looking information will be realised, and the
performance of Tate & Lyle may be materially and adversely different from
the forward-looking statements. Except where otherwise stated, this
announcement speaks as of the date hereof. Other than in accordance with its
legal or regulatory obligations (including under the New Listing Rules, the
Disclosure Guidance and Transparency Rules and the Prospectus Regulation
Rules), Tate & Lyle is not under any obligation and Tate & Lyle
expressly disclaims any intention or obligation (to the maximum extent
permitted by law) to update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.

 

No statement in this announcement (including any statement of estimated
synergies) is intended as a profit forecast or estimate for any period and no
statement in this announcement should be interpreted to mean that earnings or
earnings per share or income, cash flow from operations or free cash flow for
Tate & Lyle for the current or future financial years would necessarily
match or exceed the historical published earnings or earnings per share or
income, cash flow from operations or free cash flow for Tate & Lyle.

 

Certain figures contained in this announcement, including financial
information, have been subject to rounding adjustments. Accordingly, in
certain instances, the sum or percentage change of the numbers contained in
this announcement may not conform exactly to the total figure given.

 

Except as explicitly stated, neither the content of Tate & Lyle's website
(or any other website) nor any website accessible by hyperlinks on Tate &
Lyle's website (or any other website) is incorporated in, or forms part of,
this announcement.

APPENDIX 1

FINANCIAL INFORMATION

Illustrative pro forma financial information for the proposed combination of
Tate & Lyle and CP Kelco

To assist with understanding the impact of the Proposed Transaction on the
consolidated profit before tax from continuing operations of Tate & Lyle,
set out below is pro forma financial information for the combination of Tate
& Lyle and CP Kelco for the financial year ended 31 March 2024.

The financial information for Tate & Lyle has been extracted without
material adjustment from the audited financial information included in Tate
& Lyle's annual report for the financial year ended 31 March 2024.

The financial information for CP Kelco has been extracted from unaudited
management information prepared in accordance with US GAAP for the 12 months
ended 31 March 2024. This information has been adjusted to UK-adopted IFRS and
for Tate & Lyle accounting policies, carve out adjustments have been
applied and it is presented in British pounds.

The presentation of CP Kelco's reported EBITDA and operating profit have been
adjusted to be consistent with Tate & Lyle's adjusted performance metric
definitions (for descriptions of the various metrics and their reconciliation
to the most directly comparable reported measures see Tate & Lyle's annual
report for the financial year ended 31 March 2024 on pages 146 to 148).

Further adjustments have been made to show the pro forma impact of the
Proposed Transaction as if it had completed on 1 April 2023, being the start
of the period presented.  The pro forma effect of the Proposed Transaction
reflects the impact of transactions costs, and, the impact of higher finance
costs arising from new loan facilities and the associated draw down required
to fund the cash component of the consideration to acquire CP Kelco. Tate
& Lyle's share of the profit of its Primient joint venture (a discontinued
operation) has been removed to present only financial information from
continuing operations.

The Proposed Transaction also includes deferred consideration of up to 10
million additional Tate & Lyle ordinary shares to be delivered to Huber
approximately two years post the completion of the Proposed Transaction
subject to performance criteria. The performance criteria are based on the
share price performance of Tate & Lyle ordinary shares. Full details of
this mechanism are included in the Initial Announcement. The pro forma
financial information does not make adjustment to reflect the impact of any
such deferred consideration, as the outcome of the share price performance of
Tate & Lyle as at the future measurement dates is currently unknown.

By its nature, the unaudited pro forma statement of profit before tax for
continuing operations addresses a hypothetical situation and, therefore, does
not represent the enlarged group's actual financial results. It may not,
therefore, give a true picture of the enlarged group's financial results nor
is it indicative of the results that may, or may not, be expected to be
achieved in the future. The pro forma financial information has been prepared
for illustrative purposes only and in accordance with Annex 20 of the UK
Prospectus Regulation Rules. The unaudited pro forma statement of profit
before tax for continuing operations does not constitute financial statements
within the meaning of Section 434 of the Companies Act.

 

Pro forma statement of profit before tax for continuing operations for the
combination of Tate & Lyle and CP Kelco for the year ended 31 March 2024

 £ million                                                                    Tate & Lyle(1)      CP Kelco(2)  Pro forma adjustments  Pro forma

(3,4,5,6,7)

 Revenue                                                                      1 647               603          -                      2 250
 EBITDA                                                                       301                 86           (50)                   337
 Depreciation and amortisation                                                (94)                (61)         -                      (155)
 Operating profit                                                             207                 25           (50)                   182
 Net finance expense                                                          (6)                 (1)          (43)                   (50)
 Share of profit of joint venture                                             25                  -            (25)                   -
 Profit before tax                                                            226                 24           (118)                  132

 Bridge to adjusted measures
 EBITDA                                                                       301                 86           (50)                   337
 Exceptional items and other adjusting items                                  27                  11           50                     88
 Huber recharges                                                              -                   9            -                      9
 Adjusted EBITDA                                                              328                 106          -                      434
 Adjusted EBITDA margin                                                       19.9%               17.5%        -                      19.3%
 Adjusted depreciation and amortisation                                       (70)                (61)         -                      (131)
 Adjusted operating profit                                                    258                 45           -                      303
 Net finance expense                                                          (6)                 (1)          (43)                   (50)
 Adjusted share of profit of joint venture*                                   35                  -            (35)                   -
 Adjusted profit before tax                                                   287                 44           (78)                   253

*      Adjusted to exclude amortisation of acquired intangibles and other
fair value adjustments of £9 million and joint venture exceptional items of
£1 million. See Note 4 of the Tate & Lyle annual report for the year
ended 31 March 2024.

1.  The financial information of Tate & Lyle for the year ended 31 March
2024 has been extracted without material adjustment from its audited annual
accounts for the year ended 31 March 2024.

 

2.   The financial information of CP Kelco has been prepared on the following
basis:

a.   Financial information for the 12 months ended 31 March 2024 has been
extracted without material adjustment from the unaudited management accounts
of CP Kelco prepared under US GAAP.

b.   Adjustments have been made to convert CP Kelco's financial information
to UK-adopted IFRS and to align the financial information with Tate & Lyle
accounting policies. The principal adjustments made between US GAAP and
UK-adopted IFRS relate to the treatment of operating leases and research and
development expenditure.

c.   Carve out adjustments have been made to present CP Kelco on a
stand-alone basis, separated from Huber.

d.   Conversion from US dollars into British pounds, Tate & Lyle's
presentational currency, using an average rate for the 12-month period ended
31 March 2024 of USD/GBP of 1.26.

 

Pro forma adjustments

 

3.   The Proposed Transaction has been accounted for as an acquisition in
accordance with IFRS 3. However, no purchase price allocation has been
performed and therefore the pro forma statement of profit before tax for
continuing operations does not reflect the income statement effect of the fair
value adjustments to net assets arising from the purchase price being greater
than the book value of the net assets acquired.  The pro forma purchase price
premium has been attributed to goodwill and no pro forma amortisation nor
impairment charge has been applied to the goodwill balance in the period
presented.  The fair value adjustments, when finalised post completion of the
Proposed Transaction, may be material.

 

4.   Transaction costs of £50 million have been deducted from operating
profit. Such costs are assumed to be one off in nature and will not have a
continuing impact on the enlarged group. As such these costs will be treated
as exceptional costs and excluded from adjusted performance metrics. This
adjustment does not include the impact of share-based payment awards to be
issued in relation to the transaction. The transaction costs are assumed to
have been incurred on 1 April 2023, being the start of the pro forma period
presented.

 

5.  To finance the US$1,150 million of cash consideration for the Proposed
Transaction, Tate & Lyle has entered into a new US$600 million Bridge
Facility Agreement and a new €275 million Term Loan Agreement (please see
Appendix 3 (Additional Information) of this document for further details).
 The blended cost of these new facilities is assumed to be 4.8% per annum.
 This financing is assumed to have been in place from 1 April 2023, being the
start of the period presented. The remaining consideration is to be funded
from existing cash, resulting in deposit interest foregone.  Further, the
cash inflow from the disposal of Primient is expected to be fully returned to
shareholders through a share buyback programme, and assuming these items
occurred concurrently, the impact of these on finance costs is assumed to be
not material. The pro forma net finance expense adjustment has been estimated
to be £43 million.

 

6.   Tate & Lyle's share of the profit of its Primient joint venture (a
discontinued operation) has been removed and no gain loss on disposal
reflected in order to present pro forma profit before tax from continuing
operations only.

 

7.   No adjustment has been made to reflect the trading results of Tate &
Lyle or CP Kelco since 31 March 2024 nor any other change in their financial
positions since that date.

 

Supplementary information not included in the pro forma statement of profit
before tax

Taxation:

CP Kelco's tax affairs have historically been managed as part of the Huber tax
group. As a result, its historical effective tax rate would not be indicative
of its future effective tax rate or that of the combined business.

The medium-term underlying adjusted effective tax rate for the combined
business is expected to be around 24%. This assumes no significant changes to
the tax regulations of the main jurisdictions in which the combined business
will operate.

This underlying effective tax rate makes assumptions to put CP Kelco onto a
standalone tax basis, removed from the Huber tax group, and to exclude the
impact of certain one-off items and non-deductible foreign exchange losses
which are assumed not to recur in the medium-term.  In the near-term, prior
to the implementation of simplification and integration initiatives, the
underlying effective tax rate may be up to 200bps higher than the medium-term
expected rate.

Diluted weighted average number of ordinary shares for earnings per share
purposes

For the financial year ended 31 March 2024, Tate & Lyle had a diluted
weighted average number of ordinary shares of around 404 million.

Tate & Lyle will issue 75 million ordinary shares as part of the
consideration to acquire CP Kelco on completion of the Proposed Transaction.
 Had the issuance of these shares taken place on 1 April 2023 and therefore
the shares had been in issue for the entire 2024 financial year, the weighted
number of ordinary shares for the year ended 31 March 2024 would have been 75
million higher.

Tate & Lyle initiated a £215 million on-market share buyback programme on
20 June 2024.  If this programme is assumed to have completed on 1 April 2023
at an average share purchase price of £6.48 per share, being the average
price achieved in the programme to date, 33 million shares would have been
repurchased under the programme.  Were this the case, the weighted average
number of ordinary shares for the year ended 31 March 2024 would have been
around 33 million shares lower.

Taken together, these activities would have resulted in the adjusted diluted
weighted average number of ordinary shares for the year ended 31 March 2024
being around 446 million shares.

Estimated Synergies

The Proposed Transaction resulted from bilateral discussions between Tate
& Lyle and both Huber and CP Kelco allowing the parties to build a strong
understanding of each other's businesses, the cost base of the businesses and
the opportunities of the combination. The combination of the two businesses is
expected to deliver run-rate cost synergies of at least US$50 million (£40
million). These are expected to be delivered across the following areas:

•      Selling, general and administrative costs (expected to contribute
approximately

US$30 million of the full run-rate cost synergies);

•     Operations and supply chain (expected to contribute approximately
US$10 million of the full run-rate cost synergies); and

•      Procurement (expected to contribute approximately US$10 million of
the full run-rate cost synergies).

The run-rate cost synergies are expected to be delivered by the end of the
second full financial year following completion of the Proposed Transaction,
of which 50% to 60% is expected to be delivered by the end of the first full
financial year following completion.

In addition, reflecting the strong complementarity of the two businesses, the
combination is expected to generate run-rate revenue synergies of up to 10% of
CP Kelco's revenue by the end of the fourth financial year following
completion of the Proposed Transaction. These synergies underpin an expected
acceleration in top-line growth of the enlarged Tate & Lyle group and are
expected to be generated across the following areas (ordered by materiality):
alignment and optimisation of customer service models within the combined
business with increased direct service; increased customer penetration and
greater solution selling underpinned by the two businesses' complementary
portfolios and overlapping focus categories; the acceleration of innovation
through the leverage of complementary scientific expertise; and greater scale
and market presence in faster growing markets.

The cost to deliver the revenue and cost synergies is expected to be around
US$75 million (£60 million), the majority of which will be phased into the
first full year following completion of the Proposed Transaction.

The synergies outlined above reflect both the beneficial elements and relevant
costs and are contingent on completion of the Proposed Transaction and could
not be achieved independently of the combination of Tate & Lyle and CP
Kelco.

APPENDIX 2

RISKS

The Directors of Tate & Lyle consider the following to be the material
risk factors to Tate & Lyle as a result of the Proposed Transaction.

These risks do not seek to cover all potential risks relating to the Proposed
Transaction or the broader risks which generally affect Tate & Lyle.
Further information on the material risks which generally affect Tate &
Lyle are set out in Tate & Lyle's 2024 Annual Report. These risks also do
not set out an exhaustive list or explanation of all the risks that may affect
Tate & Lyle or its shares. Additional risks and uncertainties relating to
Tate & Lyle that are not currently known to the Board, or that the Board
currently deems immaterial, may, individually or cumulatively, also have a
material adverse effect on the business, financial results or financial
condition and prospects of Tate & Lyle.

Shareholders should read this document as a whole and not rely solely on the
information set out in this Appendix 2.

Completion of the Proposed Transaction is conditional upon the receipt of
certain regulatory approvals and these might not be satisfied or waived, or
there may be a delay in their receipt

There is no assurance that the outstanding regulatory approvals, upon which
completion of the Proposed Transaction is conditional, will be satisfied or,
where permitted, waived. In the event that there is a delay in receipt of
these approvals, completion of the Proposed Transaction may take place beyond
the expected timeline (being by the end of the 2024 calendar year). In the
event the required regulatory approvals are not received by the Long Stop Date
of 19 March 2025 (or such later date as Tate & Lyle and Huber may agree in
writing), this may result in the Proposed Transaction being terminated. If the
Proposed Transaction does not complete, or it does not complete on the timing
anticipated, it could have an adverse effect on Tate & Lyle's share
price.

The financial benefits of the Proposed Transaction will, in part, be dependent
on Tate & Lyle's ability to integrate CP Kelco effectively and to realise
the quantified synergy benefits expected to result from the Proposed
Transaction

Tate & Lyle believes that the Proposed Transaction will enable significant
opportunity for revenue and cost synergies. The synergies are based on
estimates identified by Tate & Lyle, supported by discussions with the
Huber and CP Kelco management teams. Tate & Lyle's ability to integrate CP
Kelco and achieve the projected synergies are dependent upon a number of
factors, some of which may be beyond the control of Tate & Lyle, such as
market and/or industry conditions proving to be more adverse / challenging
than anticipated, and/or the projected synergy benefits failing, or taking
longer than expected, to materialise than is currently expected. There is also
a risk that such synergy benefits may be lower than have been estimated or
that costs in respect of integration of CP Kelco may be greater than expected.

The financial benefits of the Proposed Transaction will, in part, be dependent
on the realisation of the expected recovery in the profitability of CP Kelco

A phased recovery in profitability of CP Kelco is expected to contribute to
driving significant financial benefits for Tate & Lyle following
completion of the Proposed Transaction. This recovery is dependent upon a
number of factors, some of which may be beyond the control of Tate & Lyle;
such as the projected profitability recovery taking longer to materialise, or
materialising to a lesser degree, than is currently expected.

Huber, as a significant shareholder of Tate & Lyle following completion of
the Proposed Transaction, may be able to exercise influence over Tate &
Lyle

Following completion of the Proposed Transaction, Huber will be a significant
shareholder as a result of the interest it will hold in Tate & Lyle
(anticipated to be c.16% of Tate & Lyle's enlarged share capital). Huber
will also be entitled under the terms of the Relationship Agreement to
nominate two non-executive directors on the Board for as long as it holds at
least 15% of Tate & Lyle's ordinary shares and one non-executive director
on the Board for as long as it holds at least 10% of Tate & Lyle's
ordinary shares, subject in each case to adjustment for the dilutive impact of
certain equity issuances by Tate & Lyle. As a result, Huber may have the
ability to exercise influence over the business of Tate & Lyle. In
addition, a decision by Huber to sell Tate & Lyle shares could impact Tate
& Lyle's share price. Any such sale would follow the expiry of the
two-year lock-up period and be subject to customary orderly market sell-down
provisions.

As a result of the Proposed Transaction, any risk or liabilities in relation
to CP Kelco will be transferring to Tate & Lyle

Under the terms of the SPA, Huber has given certain warranties, indemnities
and covenants in favour of Tate & Lyle to address risks and liabilities
associated with the Proposed Transaction. There is a risk that the due
diligence activities undertaken by Tate & Lyle in preparation for the
Proposed Transaction may not have identified all relevant risks and
liabilities. The warranties and indemnities provided by Huber under the SPA
are also subject to customary limitations in scope, time and amounts. In
addition, the liability of the insurers under the warranty and indemnity
insurance policy is subject to further limitations in addition to those
contained in the SPA. Tate & Lyle may, therefore, sustain losses in excess
of any such limitations and in respect of any unknown risks and liabilities.

As a result of the Proposed Transaction, Tate & Lyle's level of
indebtedness and financial leverage will rise

The consideration payable on completion of the Proposed Transaction will be
financed from cash resources and new and existing debt facilities. As a
result, Tate & Lyle's net debt and leverage position is anticipated to
rise at the financial year-end immediately following completion of the
Proposed Transaction. It is expected that Tate & Lyle's net debt to
 EBITDA leverage will increase to approximately 2.3x following completion.
This remains consistent with Tate & Lyle's target long-term leverage range
of 1.0x to 2.5x but exceeds Tate & Lyle's recent net leverage position. It
is also expected that strong cash generation will drive a significant
de-leveraging in the period following completion and Tate & Lyle will
retain capacity and flexibility for further investment. However, if net debt
to EBITDA leverage exceeds such estimates, or cash generation following
completion does not reach expected levels, this may affect Tate & Lyle's
flexibility to fund future growth.

APPENDIX 3

ADDITIONAL INFORMATION

1         Directors' service contracts

At completion of the Proposed Transaction, the non-executive directors
nominated by Huber (the 'Huber Directors') will enter into appointment letters
in respect of their appointments to the Board on substantially the same terms,
where applicable, as Tate & Lyle's existing non-executive directors.

It is expected that these letters will contain the following particulars:

 

 Title                     Date of appointment  Initial term  Total fees per year
 Non-Executive Director    Completion           3 years       None*
 *Except as set out below

The appointment of the Huber Directors is subject to Tate & Lyle's
articles of association. They will be subject to annual re-election at each
annual general meeting.

The Huber Directors will not be appointed as members of Tate & Lyle's
Nomination Committee, Audit Committee or Remuneration Committee.

The Huber Directors will not be entitled to receive any fees from Tate &
Lyle for or in connection with the performance of their duties as directors,
unless they cease to be employed or engaged by Huber or any of its affiliates,
in which case they shall be entitled to the same fees as Tate & Lyle's
existing non-executive directors.

The Huber Directors will have no entitlement to participate in any bonus,
healthcare or long term incentive plan arrangements. Tate & Lyle will
reimburse the Huber Directors for reasonable and properly documented expenses
incurred in performing their duties as directors.

The Huber Directors will be subject to confidentiality undertakings and
customary provisions in relation to outside interests.

The Huber Directors will have the benefit of directors' and officers'
liability insurance for the full term of their appointment and will be granted
a deed of indemnity by Tate & Lyle. The Huber Directors will be entitled
to consult independent professional advisers at Tate & Lyle's expense
where appropriate and in furtherance of their duties as a director.

2         Material contracts

2.1      Tate & Lyle

Save as disclosed in this paragraph, there are no contracts (other than
contracts entered into in the ordinary course of business) which have been
entered into by members of the Tate & Lyle group (i) within the two years
immediately preceding the date of this document which are or may be material
or (ii) which contain any provision under which any member of the Tate &
Lyle group has any obligation or entitlement which is material to the Tate
& Lyle group as at the date of this announcement:

2.1.1       Agreements relating to the Proposed Transaction

The agreements relating to the Proposed Transaction including the SPA,
relationship agreement and transitional services agreement, summaries of which
are set out in the section named "Key terms of the Proposed Acquisition" in
the Initial Announcement. The relationship agreement and the transitional
services agreement will be entered into on completion of the Proposed
Transaction.

2.1.2       US$800m Revolving Credit Facility Agreement

On 3 July 2014, Tate & Lyle (as guarantor) and Tate & Lyle
International Finance PLC (as the borrower) entered into a US$800,000,000
revolving credit facility agreement with certain lenders named therein, which
has been amended pursuant to an amendment letter dated 9 July 2014 and further
amended and restated on 8 March 2019, 11 May 2020, 20 December 2021 and most
recently on 16 May 2024 (such agreement as so amended and restated, the 'RCF
Agreement'). The key terms of the RCF Agreement are set out as below:

(i)     Facility: The facility is a multicurrency revolving loan facility in
an aggregate amount of US$800,000,000. As at the date of this announcement,
the RCF Agreement is undrawn.

(ii)      Purpose: The amounts borrowed under the RCF Agreement shall be
used for the general corporate purposes of the borrower.

(iii)       Availability period, repayment and prepayment: The facility is
available for utilisation until 16 May 2029 (such date being the termination
date). Each loan drawn is repayable on the last day of its interest period.
The RCF Agreement contains customary prepayment provisions, including
mandatory prepayment events in case of illegality, a disposal of all or
substantially all of the assets of the Tate & Lyle group or a change of
control in respect of Tate & Lyle. No prepayment provision is triggered by
the Proposed Transaction.

(iv)       Interest and interest periods: The rate of interest on each loan
drawn is the percentage rate per annum which is the aggregate of the
applicable margin and SOFR in relation to any loan in U.S. Dollars, EURIBOR in
relation to any loan in euro or SONIA in relation to any loan in sterling plus
the applicable credit adjustment spread for any loan in U.S. Dollars or
sterling. The margin varies depending on the long-term credit rating of Tate
& Lyle, as assigned by S&P and is also subject to an adjustment based
on annual performance against certain sustainability benchmarks. A commitment
fee is applicable on the available revolving commitment and there are
utilisation fees to the extent the facility is drawn.

(v)      Guarantees and security: The RCF Agreement is unsecured but is
guaranteed by Tate & Lyle.

(vi)     Financial covenant: The RCF Agreement requires Tate & Lyle to
ensure that, as at 30 September and 31 March each year, the ratio of the net
debt to EBITDA of Tate & Lyle (the 'Leverage Ratio') does not exceed 3.5:1
except that Tate & Lyle has the right to raise the Leverage Ratio to 4:1
for not more than three consecutive semi-annual periods following a
significant acquisition provided that this elevated ratio may not be applied
to more than three consecutive semi-annual periods or on more than three
separate occasions. For the purposes of this covenant, EBITDA shall be
adjusted to take into account the pro forma impact of any relevant
acquisitions or disposals by a member of the Tate & Lyle group.

(vii)   Representations, undertakings and events of default: The RCF
Agreement contains customary representations, undertakings and events of
default for financings of this nature.

2.1.3       US$600m Bridge Facility Agreement

On 19 June 2024, Tate & Lyle (as guarantor) and Tate & Lyle
International Finance PLC (as borrower) entered into a US$600,000,000 bridge
facility agreement with Citibank, N.A., London Branch as bookrunner and
mandated lead arranger, Citibank, N.A., London Branch as original lender and
Citibank Europe plc, UK Branch as agent (the 'Bridge Facility Agreement'). The
key terms of the Bridge Facility Agreement are set out as below:

(i)    Facility: The facility is a multicurrency term loan facility, in an
aggregate amount of US$600,000,000.

(ii)        Purpose: The amounts borrowed under the Bridge Facility
Agreement shall be used for the payment of the consideration under the SPA and
for other purposes specified in the Bridge Facility Agreement related to the
Proposed Transaction.

(iii)    Repayment and prepayment: Once drawn, the borrower shall repay each
loan on the termination date, which is the date 12 months after the date of
the Bridge Facility Agreement, but which Tate & Lyle may extend for two
further six-month periods. The Bridge Facility Agreement contains mandatory
prepayment events in connection with proceeds raised from certain disposals or
in certain other circumstances.

(iv)     Interest and interest periods: The rate of interest on each loan
drawn under the Bridge Facility Agreement is the percentage rate per annum
which is the aggregate of the applicable margin and (i) SOFR plus the
applicable credit adjustment spread in relation to any loan in U.S. Dollars;
or (ii) EURIBOR in relation to any loan in euro. The margin increases in each
subsequent three-month period up to the date falling 24 months after the date
of the Bridge Facility Agreement. A commitment fee is also payable from the
date falling two months after the date of the Bridge Facility Agreement as
well as certain other fees.

(v)        Guarantees and security: The Bridge Facility Agreement is
unsecured but is guaranteed by Tate & Lyle.

(vi)       Financial covenant: The Bridge Facility Agreement requires Tate
& Lyle to ensure that, as at 30 September and 31 March each year, the
ratio of the net debt to EBITDA of Tate & Lyle (the 'Leverage Ratio') does
not exceed 3.5:1 except that Tate & Lyle has the right to raise the
Leverage Ratio to 4:1 for not more than three consecutive semi-annual periods
following a significant acquisition provided that this elevated ratio may not
be applied to more than three consecutive semi-annual periods or on more than
three separate occasions. For the purposes of this covenant, EBITDA shall be
adjusted to take into account the pro forma impact of any relevant
acquisitions or disposals by a member of the Tate & Lyle group.

(vii)     Representations, undertakings and events of default: The Bridge
Facility Agreement contains customary representations, undertakings and events
of default for financings of this nature.

2.1.4       EUR275m Term Loan Facility Agreement

On 26 July 2024, Tate & Lyle (as guarantor) and Tate & Lyle
International Finance PLC (as borrower) entered into a €275,000,000 term
loan facility agreement with, amongst others, Citibank, N.A., London Branch as
coordinator, certain lenders named therein and Citibank Europe plc, UK Branch
as agent (the 'Term Loan Facility Agreement'). The key terms of the Term Loan
Facility Agreement are set out as below:

(i)    Facility: The facility is a multicurrency term loan facility, in an
aggregate amount of €275,000,000.

(ii)        Purpose: The amounts borrowed under the Term Loan Facility
Agreement shall be used for the payment of the consideration under the SPA and
for other purposes specified in the Term Loan Facility Agreement related to
the Proposed Transaction.

(iii)    Repayment and prepayment: Once drawn, the borrower shall repay each
loan on the termination date, which is the date 36 months after the date of
the Term Loan Facility Agreement. Tate & Lyle has no ability to extend the
termination date beyond such date. The Term Loan Facility Agreement contains
prepayment provisions, including mandatory prepayment events in case of
illegality, a disposal of all or substantially all of the assets of the Tate
& Lyle group or a change of control in respect of Tate & Lyle.

(iv)       Interest and interest periods: The rate of interest on each loan
drawn under the Term Loan Facility Agreement is the percentage rate per annum
which is the aggregate of the applicable margin and (i) SOFR plus the
applicable credit adjustment spread in relation to any loan in U.S. Dollars;
or (ii) EURIBOR in relation to any loan in euro. The margin varies depending
on the long-term credit rating of Tate & Lyle. A commitment fee is also
payable from the date falling two months after the date of the Term Loan
Facility Agreement onwards as well as certain other fees.

(v)       Guarantees and security: The Term Loan Facility Agreement is
unsecured but is guaranteed by Tate & Lyle.

(vi)       Financial covenant: The Term Loan Facility Agreement requires
Tate & Lyle to ensure that, as at 30 September and 31 March each year, the
ratio of the net debt to EBITDA of Tate & Lyle (the 'Leverage Ratio') does
not exceed 3.5:1 except that Tate & Lyle has the right to raise the
Leverage Ratio to 4:1 for not more than three consecutive semi-annual periods
following a significant acquisition provided that this elevated ratio may not
be applied to more than three consecutive semi-annual periods or on more than
three separate occasions. For the purposes of this covenant, EBITDA shall be
adjusted to take into account the pro forma impact of any relevant
acquisitions or disposals by a member of the Tate & Lyle group.

(vii)     Representations, undertakings and events of default: The Term Loan
Facility Agreement contains customary representations, undertakings and events
of default for financings of this nature.

2.1.5       US$680m US Private Placement Documents

Tate & Lyle, acting as parent guarantor, periodically issues private
placement notes through its subsidiary, Tate & Lyle International Finance
PLC, denominated in US dollars (the 'US PP Notes'), to institutional
investors. Tate & Lyle International Finance PLC has issued US PP Notes
pursuant to:

(i)         the note purchase and guarantee agreement dated 24 September
2015 (as amended on 5 August 2019) entered into by, amongst others, Tate &
Lyle as parent guarantor and Tate & Lyle International Finance PLC as
issuer, with respect to the outstanding US$180,000,000 4.06 per cent. series C
senior notes due 29 October 2025, and US$100,000,000 4.16 per cent. series D
senior notes due 29 October 2027;

(ii)       the note purchase and guarantee agreement dated 29 August 2019
entered into by, amongst others, Tate & Lyle as parent guarantor and Tate
& Lyle International Finance PLC as issuer, with respect to the
outstanding US$100,000,000 3.31 per cent. series A senior notes due 19
November 2029, and US$100,000,000 3.41 per cent. series B senior notes due 19
November 2031; and

(iii)       the note purchase and guarantee agreement dated 18 May 2020
entered into by, amongst others, Tate & Lyle as parent guarantor and Tate
& Lyle International Finance PLC as issuer, with respect to the
outstanding US$100,000,000 2.91 per cent. series A senior notes due 6 August
2030, and US$100,000,000 3.01 per cent. series B senior notes due 6 August
2032.

(together, the 'US PP Documents').

The terms and conditions of each of the US PP Notes are broadly similar and
contain mostly standard private placement market terms. The key terms of the
US PP Notes are set out as below:

(i)         Prepayment and make-whole: The US PP Notes may be prepaid at
any time in whole or in part at par plus all accrued and unpaid interest plus
a market make-whole premium, if any. In general terms, the make-whole premium
will be equal to the difference (but not less than zero) between: (a) the
present value of the remaining principal payments on the principal amount to
be prepaid, discounted at a rate equal to the yield on the most
actively-traded on the run US treasury note plus 50 basis points; and (b) the
principal amount of the US PP Notes to be prepaid. The US PP Notes are not
subject to mandatory prepayments prior to the final maturity date except in
connection with a change of control or due to acceleration on an event of
default.

(ii)      Interest and interest periods: Interest under the US PP Notes is
payable by Tate & Lyle International Finance PLC semi-annually in arrear.

(iii)       Guarantees: The US PP Notes are guaranteed by Tate & Lyle.

(iv)       Financial Covenant: Each of the US PP Documents requires Tate
& Lyle to ensure that, as at 30 September and 31 March each year, the
ratio of net debt to EBITDA (the "Leverage Ratio") does not exceed 3.5:1
except that Tate & Lyle has the right to raise the Leverage Ratio to 4:1
for not more than three consecutive semi-annual periods following a
significant acquisition provided that this elevated ratio may not be applied
to more than three consecutive semi-annual periods or on more than three
separate occasions. For the purposes of this covenant, EBITDA shall be
adjusted to take into account the pro forma impact of any relevant
acquisitions or disposals by a member of the Tate & Lyle group.

(v)      Representations, other covenants and events of default: The US PP
Documents contain customary representations, covenants and events of default
for financings of this nature.

2.1.6       Primient Agreements

As announced on 27 June 2024, Tate & Lyle completed the sale of its
remaining 49.7% interest in Primient to KPS Capital Partners, LP for cash
proceeds of US$350 million (c.£279 million). Net cash proceeds, after tax and
transactions costs, are expected to be around US$270 million (c.£215
million).

Long-term agreements were put in place with Primient in April 2022 to ensure
supply security, with a remaining life of around 18 years as at the date of
this announcement. These agreements continue to operate and Primient remains a
key supplier to the Tate & Lyle group and vice versa. In particular, these
arrangements include:

(i)      Supply Agreement: Primient group is required to manufacture at its
facilities and supply certain food and beverage solutions products to Tate
& Lyle pursuant to the terms of the Supply Agreement.

(ii)     Tolling Agreement: Primient group is required to, in its capacity
as a toll manufacturer, produce two specific products for Tate & Lyle
Solutions.

(iii)     Reverse Tolling Agreement: Tate & Lyle Solutions is required
to, in its capacity as a toll manufacturer, produce certain industrial starch
products for Primient from its Sagamore facility pursuant to the terms of a
Reverse Tolling Agreement.

(iv)      Raw Materials Agreement: Primient is required to provide
procurement services to Tate & Lyle (including, as needed to manage the
procurement and pricing risk of corn and associated co-products).

2.2      CP Kelco

Save as disclosed in this paragraph, there are no contracts (other than
contracts entered into in the ordinary course of business) which have been
entered into by CP Kelco group (i) within the two years immediately preceding
the date of this document which are or may be material or (ii) which contain
any provision under which CP Kelco group has any obligation or entitlement
which is material to CP Kelco group as at the date of this announcement:

2.2.1       Agreements relating to the Proposed Transaction

The agreements relating to the Proposed Transaction including the SPA,
relationship agreement and transitional services agreement, summaries of which
are set out in the section named "Key terms of the Proposed Acquisition" in
the Initial Announcement. The relationship agreement and the transitional
services agreement will be entered into on completion of the Proposed
Transaction.

2.2.2       New Markets Tax Credit

On or around February 2023, CP Kelco U.S., Huber Equity Corporation ('Huber
Equity') and Huber entered into a transaction relating to the New Markets Tax
Credit arrangements in the United States (the 'NMTC Arrangement') with certain
counterparties. Under the NMTC Arrangement, CP Kelco U.S. has obtained certain
loans to fund the construction of a food production and manufacturing facility
located in Okmulgee, Oklahoma (the 'Project') which is a low-income community
in return for certain tax incentives.

The loans obtained by CP Kelco U.S. under the NMTC Arrangement total an
aggregate of c.US$20m and are used to finance the acquisition of equipment,
real estate and other costs as part of the Project. The loans are not
permitted to be repaid prior to February 2030. As part of the NMTC
Arrangements, certain guarantees and indemnities have been given by CP Kelco
U.S. and Huber to the counterparties (including in respect of any losses
suffered by the counterparties as a result of CP Kelco U.S.'s failure to
comply with the applicable regulatory requirements under the NMTC
Arrangements).

It is expected that, upon completion of the Proposed Transaction, Tate &
Lyle will step into the NMTC Arrangement (in place of Huber and Huber Equity)
and CP Kelco U.S. will continue to comply with its obligations under the NMTC
Arrangements.

Tate & Lyle and Huber have also agreed an allocation of any liabilities in
connection with the NMTC Arrangements. As part of this, as between Tate &
Lyle and Huber, any liabilities under the NMTC Arrangements, to the extent
they relate to the period prior to completion of the Proposed Transaction,
shall remain with Huber. Additionally, Huber has also agreed to retain any
liabilities in respect of certain environmental indemnities provided by CP
Kelco U.S. under the NMTC Arrangements to the NMTC counterparties. As a
result, Tate & Lyle currently does not anticipate there to be any material
liabilities incurred by CP Kelco U.S. or Tate & Lyle in connection with
the NMTC Arrangements post-completion.

3         Litigation

3.1      Tate & Lyle

No member of the Tate & Lyle group is or has been involved in any
governmental, legal or arbitration proceedings nor, so far as Tate & Lyle
is aware, are any such proceedings pending or threatened which may have, or
have had during the 12 months preceding the date of this announcement, a
significant effect on the Tate & Lyle group's financial position or
profitability.

3.2      CP Kelco

No member of the CP Kelco group is or has been involved in any governmental,
legal or arbitration proceedings nor, so far as Tate & Lyle is aware, are
any such proceedings pending or threatened which may have, or have had during
the 12 months preceding the date of this announcement, a significant effect on
the CP Kelco group's financial position or profitability.

 

4         Related party transactions

Your attention is drawn to the following disclosures which are incorporated by
reference into this document:

·           the disclosures on pages 157 and 191 of the annual report
and audited accounts of Tate & Lyle in respect of its financial year
ending on 31 March 2022;

·           the disclosures on pages 156 and 194 of the annual report
and audited accounts of Tate & Lyle in respect of its financial year
ending on 31 March 2023;

·           the disclosures on pages 146 to 148, 152 and 188 of the
annual report and audited accounts of Tate & Lyle in respect of its
financial year ending on 31 March 2024; and

·         the disclosures in the announcement made by Tate & Lyle on
27 June 2024, related to the completion of the sale of its remaining 49.7%
interest in Primary Products Investments LLC to KPS Capital Partners, LP,
receiving cash proceeds of US$350 million (c.£279 million).

Save as disclosed above, Tate & Lyle has not entered into any related
party transaction during the period starting on 1 April 2021 and up to the
date of this announcement that has not previously been published.

5         No significant change

5.1      Tate & Lyle

There has been no significant change in the financial position of the Tate
& Lyle group since 31 March 2024, being the end of the last financial
period for which audited financial statements have been published.

5.2      CP Kelco

There has been no significant change in the financial position of CP Kelco
since 31 March 2024, being the end of the last financial period for which a
pro forma unaudited income statement has been included in the document.

6         Incorporation by reference

The following sections of the Initial Announcement available here
(https://www.tateandlyle.com/sites/default/files/2024-06/rns-combination-tate-lyle-and-cp-kelco-20-june-2024.pdf)
are incorporated by reference in, and form part of, this announcement:

·             Strategic acceleration: Creating a leading speciality
food and beverage solutions business

·             About CP Kelco

·             Key terms of the Proposed Acquisition

·             Management and employees

·             Financing the Proposed Transaction

·             Relationship Agreement

·             Other aspects of the Proposed Transaction

Any statement which is deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for the purpose of this announcement to
the extent that a statement contained herein modifies or supersedes such
earlier statement (whether expressly, by implication or otherwise). Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this document.

 

ENDS

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