KPS Capital Partners, LP (KPS) 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 $1.7bn.
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 recognisable 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 $2.3bn.
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 honoured 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 capitalise 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.