StockMarketWire.com - Food and beverage ingredients group Tate & Lyle said it had agreed to sell a controlling stake in its primary products business in North America and Latin America to KPS Capital Partners for $1.3 billion.

The deal would also involve the sale of the company's interests in the Almidones Mexicanos and DuPont Tate & Lyle Bio-Products Company joint ventures.

Tate & Lyle and KPS would each own 50% of a subsidiary housing the assets, known as NewCo, with KPS having board and operational control.

The deal valued the whole of NewCo at an enterprise value of about $1.7 billion (around £1.2 billion), equivalent to a multiple of 5.1 times earnings before interest, tax, depreciation and amortisation for the year ended 31 March 2021.

Tate & Lyle said it expected to receive gross cash proceeds of about $1.3 billion, resulting in net cash proceeds of about $1.2 billion, after customary adjustments and transaction costs.

The company said it planned to return around £0.5 billion to shareholders by way of a special dividend and associated share consolidation.

The balance would be retained 'to strengthen Tate & Lyle's balance sheet, provide flexibility to invest to accelerate growth and for potential tax arising as a result of the proposed transaction'.


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