Dive Brief:
- Ingredion is buying Tate & Lyle for $3.6 billion, a deal that would create an ingredient giant with a sprawling portfolio and nearly $10 billion in annual revenue. The companies announced in May they were in discussions for a possible deal.
- The purchase will broaden Ingredion’s specialty ingredients platform, add complementary capabilities in multi-ingredient systems and recipe development, and create a deeper portfolio that addresses more consumer needs. It will also diversify Ingredion’s global reach and give it greater scale in North America, Europe and emerging markets.
- Ingredion is buying Tate & Lyle even as the British-based company struggles with slowing demand in Europe and North America due to war and inflation, which has prompted many consumers to cut back on spending. Tate & Lyle recently announced a $200 million savings program over five years in the U.S., and is investing more money to drive volumes and return the business to top-line growth.
Dive Insight:
As food manufacturers respond to consumer demand for a multitude of attributes in the products they consume, ingredient suppliers such as Ingredion have responded through M&A. Shoppers are increasingly looking for less processed foods, lower sugar, more protein and fiber, clean labels and a pleasing texture, often in the same products.
For Ingredion and other ingredient suppliers, amassing a wider portfolio that addresses more of these needs better positions them as a more attractive one-stop shop for food manufacturers launching new products or reformulating existing ones. This is especially valuable as food companies turn to ingredient suppliers to help them develop products faster and work through challenges that arise throughout the process.
The deal for Tate & Lyle “establishes a global leader in ingredient solutions with the innovation expertise and geographic reach that will help create the future of food,” Jim Zallie, Ingredion’s CEO, said in a statement. “The combined business will be better positioned to serve customers’ needs for the development of great-tasting, healthier and affordable food products that consumers demand.”
Ingredion, which uses tapioca, corn, potatoes and other materials to create ingredients, said the merger will combine its texture and sugar reduction capabilities with Tate & Lyle’s expertise in mouthfeel, sweetening and fortification. The combined firm also will have a presence in other areas, including animal nutrition, brewing, pharmaceuticals and papermaking.
The purchase is expected to be completed in the second half of 2027. The new company is expected to generate cost synergies of around $130 million annually by the end of 2030, the firms said.
The deal comes about a week after Ingredion rival IFF sold its food ingredients business to CVC Capital Partners for $4.3 billion, the latest move by the company to focus its sprawling business and improve profitability.
