Tate & Lyle deal looks more sweet than sour
15/05/2026 10:52
The author is a Reuters Breakingviews columnist. The opinions expressed are her own. By Aimee Donnellan DUBLIN, May 15 (Reuters Breakingviews) - A Tate & Lyle TATE.L takeover offer looks just tasty enough. On Thursday, Ingredion INGR.N, which makes sweeteners and flavourings for the food and drinks industry, said it was in talks to buy its British rival for 3.7 billion pounds including debt. Joining forces makes sense when consumers are growing more discerning, and food volumes may suffer as the weight loss drug craze expands. A fat premium and clean structure may prove hard for the London-listed group's shareholders to resist. Food groups are under pressure. In the U.S., Ingredion’s home market, weight loss drugs are curbing punters appetites, leading to lower demand for sweet stuff. Last October, a Gallup poll revealed that over 12% of Americans were taking the medications dubbed GLP-1s which include Eli Lilly's LLY.N Mounjaro and Novo Nordisk's NOVOb.CO Ozempic. Small wonder then that M&A is picking up. Deals offer savings, and give players greater scale in sectors like ingredients, that may thrive as consumers search for new pleasures besides fat and sugar. Tate & Lyle, which makes low calorie sweeteners, in 2024 splurged $1.8 billion on CP Kelco, while earlier this year Unilever ULVR.L agreed to merge its food business with U.S. peer McCormick MKC.N. Yet dealmaking isn't always a panacea: Unilever's merger was seen as risky and complex by some, while Tate & Lyle's acquisition was expensive. The London-listed group's shareholders may therefore find a juicy all-cash deal easier to swallow, especially one at a more than 60% premium. For Ingredion CEO James Zallie the deal math also looks appetising. Investec reckons a merger could deliver around 115 million pounds of synergies. Add that to the 273 million pounds of operating profit Tate & Lyle is expected to deliver in 2026, per LSEG forecasts, take off tax, and the return on the total outlay is around 8%, in line with the sector's cost of capital. Still, on Friday Tate & Lyle’s shares were only trading at 537 pence a share, an over 10% discount to the offer. That may reflect competition concerns, given both companies are big players in ingredients, which could slow the deal down. Meanwhile, top shareholder Huber, which owns nearly 17% of Tate & Lyle, has yet to publicly bless the transaction. But given the market headwinds, there's a good chance the UK group's investors are likely to take the money and run. Follow Aimee Donnellan on LinkedIn. CONTEXT NEWS U.S. food ingredients maker Ingredion is in talks with British rival Tate & Lyle over a possible takeover of the London-listed firm in a 2.74 billion pound ($3.7 billion) deal, the British company said on May 14. A deal between Tate & Lyle, known for its artificial sweeteners used in Coca-Cola drinks, and Ingredion, could create a food and beverage ingredients giant worth more than $10 billion. Under the proposal, Tate & Lyle said its shareholders would receive up to 615 pence per share — comprising 595 pence in cash and up to 20 pence in dividends — a 64% premium to its closing price on Wednesday. Shares in Tate & Lyle were trading at 537.5 pence a share on May 15. Ingredion and Tate & Lyle have both been under pressure https://www.reuters.com/graphics/BRV-BRV/klpylrajjvg/chart.png (Editing by Neil Unmack; Production by Streisand Neto) ((For previous columns by the author, Reuters customers can click on DONNELLAN/Aimee.Donnellan@thomsonreuters.com))