Tate & Lyle has agreed to a £2.7 billion cash takeover by US ingredients group Ingredion, the companies announced on Monday, in a deal that will remove the FTSE 250 company from the London Stock Exchange after 87 years and create a larger speciality food ingredients business.

Under the terms of the recommended offer, Tate & Lyle shareholders will receive 595p per share in cash plus 20p in dividends, equivalent to 615p per share and representing a premium of about 59 per cent to the company's closing share price before takeover talks were disclosed in mid-May. Reuters reported that the transaction values Tate & Lyle at £3.8 billion including debt, while Ingredion said the deal implies an enterprise value of approximately £3.7 billion.

The acquisition brings together two companies focused on food and beverage ingredients at a time when manufacturers are seeking products that support lower-sugar, higher-protein and more functional foods. Ingredion said the combination would expand its capabilities in texturants, sugar reduction and fortification, while strengthening its geographic reach across the Americas, Europe, the Middle East, Africa and Asia-Pacific.

Jim Zallie, chairman, president and chief executive of Ingredion, said: “Combining Ingredion and Tate & Lyle’s complementary portfolios establishes a global leader in ingredient solutions with the innovation expertise and geographic reach that will help create the future of food.”

According to Reuters, the companies expect annual deal synergies of $130 million to be achieved by the end of 2030 and forecast that the enlarged business will increase earnings by at least 15 per cent from the first year following completion.

The agreement comes after a difficult period for Tate & Lyle, whose performance has been affected by weak consumer demand, rising costs and changing consumption patterns. The company, best known historically for sugar products including Golden Syrup, sold its sugar business in 2010 and has since focused on speciality ingredients and sweeteners, including the Splenda brand.

David Hearn, chair of Tate & Lyle, said: “We believe the next chapter with Ingredion will create a business with even greater potential, greater scale, and increased investment in innovation in support of customers.” He added that Tate & Lyle’s board had unanimously recommended the offer to shareholders.

The takeover is the latest foreign acquisition of a London-listed company and adds to concerns about the shrinking number of major businesses quoted on the UK stock market, following a series of agreed deals involving prominent British-listed groups this year.

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