REG - Tate & Lyle PLC - Sale of remaining interest in Primient JV to KPS

Tate & LyleAnnouncement

23/05/2024 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240523:nRSW5398Pa&default-theme=true

RNS Number : 5398P  Tate & Lyle PLC  23 May 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

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

FOR IMMEDIATE RELEASE

23 May 2024

Tate & Lyle PLC

 

("Tate & Lyle")

 

Sale of the remaining interest in Primient joint venture

to KPS Capital Partners, LP for US$350m (c.£279m)

Completes Tate & Lyle's transformation to a growth-focused speciality
business

 

Proceeds from sale to be returned to shareholders through a share buyback
programme

 

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.  This transformation has included a much sharper focus on
customers and categories, increased investments in innovation and solution
selling capabilities, and significantly strengthening our sweetening,
mouthfeel and fortification platforms through new product development and
acquisitions.

A critical step in this journey was the sale, in April 2022, of a controlling
interest in Primient, our primary products business in North America and Latin
America, to KPS Capital Partners, LP ("KPS").  Today we are announcing an
agreement to sell our remaining 49.7% interest in Primary Products Investments
LLC ("Primient") to KPS (the "Transaction").

Transaction highlights:

·     Tate & Lyle will receive 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).

·     The Transaction values Tate & Lyle's 49.7% stake in Primient at
6.5x EV/EBITDA (year ended 31 March 2024), ahead of the valuation of Primient
on the sale of the initial controlling stake, completed on 1 April 2022 (5.1x
EV/EBITDA (year ended 31 March 2021)).

·     Robust long-term agreements put in place with Primient in April 2022
to ensure supply security, with a remaining life of around 18 years, will
continue to operate following the Transaction.

·     Total cash proceeds from the full exit of Primient, including
dividends received since the sale of the initial holding in April 2022, exceed
US$1.5 billion.

The Transaction completes the staged exit from Primient well ahead of expiry
of the original lock-up period of eight years which lasts until 1 April 2030.
 It also simplifies the business and fully focuses Tate & Lyle as a
global, growth-focused speciality food and beverage solutions business,
aligned to attractive structural and growing consumer trends for healthier,
better tasting food and drink.

The Transaction proceeds will be payable in cash at completion which is
anticipated by the end of July 2024.

Use of proceeds:

Consistent with the Board's clear capital allocation policy and the strength
of the Tate & Lyle balance sheet, the Board intends to return the net cash
proceeds received from this Transaction (expected to be around US$270 million
(c.£215 million)) to shareholders by way of an on-market share buyback
programme. The buyback is expected to commence on completion of the
Transaction.

Commenting on the sale, Nick Hampton, Chief Executive said:

"I am delighted that we have reached agreement with KPS for the sale of our
remaining stake in Primient well ahead of the original lock-up period. This is
testament to the relationships we have built with KPS and Primient, and the
robust framework for the separation of Primient established two years ago.
With this sale, the transformation of Tate & Lyle into a fully-focused
speciality food and beverage solutions business is complete.  We are now
well-positioned to capture the significant growth opportunities ahead as we
look to provide our customers with the solutions they need to meet growing
consumer demand for healthier, tastier and more sustainable food and drink."

Michael Psaros, Co-Founder and Managing Partner of KPS Capital Partners, said:

"We are thrilled to acquire Tate & Lyle's ownership interest in Primient
and, upon completion of the purchase, KPS will be sole-owner of the company.
Primient's performance has exceeded our expectations, and we are very
confident in its future. We thank Tate & Lyle for its constructive
partnership with KPS over the past two years.  Primient looks forward to
continuing its positive relationship with Tate & Lyle as a supplier under
the long-term supply agreements."

 

Further details (including the pro-forma effect of the Transaction on Tate
& Lyle) are set out in the Notes below.

 

Enquiries:

For more information contact Tate & Lyle PLC:

Christopher Marsh, VP, Investor Relations

Mobile: +44 (0)7796 192 688

 

Nick Hasell (FTI Consulting), Media Relations

Mobile: +44 (0)7825 523 383

 

Notes:

1.       The Transaction constitutes a Class 2 transaction for Tate &
Lyle under the UK Listing Rules. The gross assets that are the subject of this
Transaction amounted to US$209m (£165m) at 31 March 2024. These assets
generated a reported profit before tax (at share) for the financial year ended
31 March 2024 of US$32m (£25m).

 

2.       PRO-FORMA RESTATEMENT OF PRIOR YEAR FINANCIAL INFORMATION FOR THE
SALE OF THE REMAINING INTEREST IN THE PRIMIENT JOINT VENTURE

To assist with understanding the impact of the Transaction, set out below is
pro-forma financial information for Tate & Lyle for the financial year
ended 31 March 2024. The pro-forma financial information is designed to show
the illustrative impact of the Transaction on continuing operations of Tate
& Lyle as if it had completed on 1 April 2023, being the start of the
period presented.  The pro-forma adjustments show a reduction in adjusted
diluted earnings per share for each period.

The Transaction has been treated as a non-adjusting post balance sheet event
in the results for the financial year ended 31 March 2024, also announced on
23 May 2024.  As a result, the Transaction has given rise to no change in
Tate & Lyle's accounting for Primient or of its presentation in the Tate
& Lyle financial statements for the financial year ended 31 March 2024.

 Year ended 31 March 2024
 £m unless otherwise stated                        Adjusted     Impact of the Transaction  Pro forma

                                                   reported
 Revenue                                           1 647        -                          1 647
 Adjusted EBITDA                                   328          -                          328
 Depreciation(1)                                   (57)         -                          (57)
 Amortisation                                      (13)         -                          (13)
 Adjusted operating profit                         258          -                          258
 Net finance expense(1)                            (6)          -                          (6)
 Adjusted share of profit/(loss) of joint venture  35           (35)                       -
 Adjusted profit before tax                        287          (35)                       252
 Adjusted income tax expense                       (62)         8                          (54)
 Adjusted profit for the year                      225          (27)                       198
 Effective tax rate expense %                      21.6%                                   21.1%
 Diluted number of shares outstanding:             404.2                                   404.2
 Diluted earnings per share (pence)                55.5p        (6.4p)                     49.1p

 

1.     No pro forma adjustment for interest income generated from the
proceeds has been made as it has been assumed the net proceeds received from
this Transaction will be returned to shareholders by way of an on-market share
buyback programme.

 

 

About Tate & Lyle:

Supported by our 160-year history of ingredient innovation, we partner with
customers to provide consumers with healthier and tastier choices when they
eat and drink. We are proud that millions of people around the world consume
products containing our ingredients every day.

 

Through our expertise in sweetening, fortification, and texture, we develop
ingredient solutions which reduce sugar, calories, and fat, add fibre and
protein, and provide texture and stability in categories including beverages,
dairy, bakery, snacks, soups, sauces, and dressings.

 

We have more than 3,300 employees working in around 58 locations serving
customers across

121 countries. Science, Solutions, Society is our brand promise and how we
will achieve our purpose of Transforming Lives Through the Science of Food. By
living our purpose we believe we can successfully grow our business and have a
positive impact on society. We live our purpose in three ways, by supporting
healthy living, building thriving communities and caring for our planet.

 

Tate & Lyle is listed on the London Stock Exchange under the symbol
TATE.L. American Depositary Receipts trade under TATYY. In the year to 31
March 2024, Tate & Lyle revenue from continuing operations totalled £1.65
billion. For more information, please visit https://www.tateandlyle.com
(https://www.tateandlyle.com/)  or follow Tate & Lyle on LinkedIn
(https://www.linkedin.com/company/tate-&-lyle) , X
(https://twitter.com/tateandlyleplc) (Twitter), Facebook
(https://www.facebook.com/TateandLyleCommunity)  or YouTube
(https://www.youtube.com/c/TateLylePLC) .

 

Tate & Lyle PLC's LEI number is: 2138008K14474WPKZ244

 

About KPS

KPS, through its affiliated management entities, is the manager of the KPS
Funds, a family of investment funds with approximately $21.4 billion of assets
under management (as of December 31, 2023).  For over three decades, the
Partners of KPS have worked exclusively to realise 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 currently generate aggregate annual revenues of
approximately $20.3 billion, operate 222 manufacturing facilities in 26
countries, and have approximately 48,000 employees, directly and through joint
ventures worldwide (as of December 31, 2023).  The KPS investment strategy
and portfolio companies are described in detail at www.kpsfund.com
(https://eur03.safelinks.protection.outlook.com/?url=http%3A%2F%2Fsecure-web.cisco.com%2F10rR5s2fZbAReH2bM0Fi0y4QSx_25Lmhcj44YWsEH5Hz9JXcfJ1mZOOYv2OEVrO1L4O-6hBusxTccfzzT8VkM4CZbP-YLz9AMH1O8JEkNVXJi-8wQoOu0OCqH5M_ld7xhiLMU7EP-iFJWqgOiH2JuWH4_kOFKNSm4EZYKHcbLy9Dc6AvYiK4wjCVI2Q9wVPVgB1yEyNi5a2lLHAaHEZkQk6guRKLSpXMYDOSqtad3tehHZFVGfcLTke_LJ32eKyxc6K3CgbrmQjRw30K9MrMXfZ59ut7kHtSDNEnst3Zv56wptPDZMXq1DkyldQlMy7ME%2Fhttp%253A%252F%252Fwww.kpsfund.com&data=05%7C02%7CRowan.Adams%40tateandlyle.com%7C14d7dd320e7b437a162e08dc756dd488%7C39cc8f4f7ada4a2a9685c30a4321498c%7C0%7C0%7C638514361812339549%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C0%7C%7C%7C&sdata=%2BM%2BpyFSNyx%2BqIqAm87yJu230KclmTkxvrNhNaYpXBaY%3D&reserved=0)
.

 

Forward looking statements

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, 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 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.

 

Cautionary Statements

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.

 

Important information in relation to advisors

Citigroup Global Markets Limited is acting as exclusive financial adviser to
Tate & Lyle on the Transaction. Linklaters LLP is acting as legal advisor
to Tate & Lyle on the Transaction.

 

Citigroup Global Markets Limited ("Citi"), which is authorised by the
Prudential Regulation Authority ("PRA") and regulated in the UK by the
Financial Conduct Authority ("FCA") and the PRA, is acting as the sole advisor
for Tate & Lyle and for no one else in connection with the matters
described in this announcement and will not be responsible to anyone other
than Tate & Lyle for providing the protections afforded to clients of Citi
nor for providing advice in connection with any other matters referred to in
this announcement. Neither Citi 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 Citi
in connection with this announcement, any statement contained herein or
otherwise.

 

ENDS

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  DISFLFSREVIFFIS