Tate & Lyle entered the hydrocolloids world in force today acquiring both Cesalpinia and CCI. Tate & Lyle have been talking about entering the hydrocolloids world by building a xanthan plant for several years. Many people felt that with the rise of Chinese xanthan production this could be an unwise strategy. However, with todays acquisitions, Tate & Lyle have joined the ranks of Kerry and Cargill as new, up and coming entrants in the hydrocolloids world.
The announcement reads
Tate & Lyle, the global renewable ingredients company, today announced the signing of agreements to acquire US specialty food ingredients company Continental Custom Ingredients ("CCI") and the Italian based Cesalpinia group of companies ("Cesalpinia Foods") (together "the businesses"). The transactions are expected to be completed by the first quarter of the 2006 calendar year for a total consideration of £74 million.
CCI is Employee owned and was founded in 1975. Its headquarters and primary operations are located in Sycamore, Illinois and it also has operations in Mexico and Canada. CCI is a recognised leader in dairy stabilisers and emulsifier systems and works closely with customers to develop ingredient systems for the North American market. CCI also has expertise in beverage flavours and vitamin and mineral fortification. The consideration payable on closing will be £40 million, made up of cash of £36 million plus assumption of CCI net long term debt estimated at £4 million. The total consideration equates to approximately 1.2 times CCI turnover for the financial year to 31 December 2004. CCI will be reported as part of Tate & Lyle Food & Industrial Ingredients, Americas. The acquisition is expected to cover Tate & Lyle¹s cost of capital in the first full year of operation.
Cesalpinia Foods is owned by Italian company MARE Group. It was established in the 1960¹s as a producer of natural flavours and later diversified into manufacturing and marketing natural gums and stabilisers. It operates predominantly from Italy, with production sites in Sicily and Milan. The acquisition expands Tate & Lyle¹s knowledge of stabilising systems and gums and further enhances its expertise in providing solutions for key target markets such as dairy, soups, sauces and dressings. The debt free consideration, payable in cash on closing, will be £34 million and equates to approximately 1.4 times Cesalpinia Foods turnover for the financial year to 31 December 2004. Cesalpinia Foods will be reported as part of Tate & Lyle Food & Industrial Ingredients, Europe. The acquisition is expected to cover Tate & Lyle¹s cost of capital in the second full year of operation.
"These bolt-on acquisitions are an excellent fit with Tate & Lyle¹s stated growth strategy" said Iain Ferguson, Tate & Lyle¹s Chief Executive. "They represent a further step in broadening our product mix, technology and customer base in rapidly expanding areas such as blends and fortification. Both businesses have been customers of ours for a number of years and we are pleased to welcome them to our team.
"These businesses bring expertise in dairy, gums and custom formulation and will complement Tate & Lyle¹s broad product range, operational scale and sophisticated research capabilities. Together we will be more responsive in developing distinctive and innovative solutions for the food industry as part of our value added growth strategy."
For more information contact Tate & Lyle PLC: Mark Robinson (Investor Relations) Tel: +44(0)20 7626 6525 or Mobile: +44(0)7793 515 861 Ferne Hudson (Press) Tel: +44(0)20 7626 6525 or Mobile: +44(0)7713 067 433. Press release