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* KPS Capital to pay $1.3 billion for controlling stake in
unit
* Tate & Lyle to return 500 million stg to shareholders
* European primary products operations not part of deal
(Adds shares, analyst comment, background, detail)
By Yadarisa Shabong
July 12 (Reuters) - Tate & Lyle said on Monday it
will sell a controlling stake in its commercial sweeteners unit
to a private equity firm in a deal valuing the new standalone
business at $1.7 billion including debt as it focuses on
healthier food and drinks.
U.S.-based KPS Capital Partners and Tate & Lyle, one of the
world's biggest producers of sweeteners, will each own 50% of
the new company, with the private equity firm having operational
and board control.
The deal comes after a flurry of private equity interest in
British companies, including for supermarket group Morrisons
, driven by cheap valuations due in part to the pandemic
and Brexit.
Tate & Lyle shares rose 2.6% in morning trade as the company
said it would return 500 million pounds ($695.00 million) to
shareholders upon completion of the deal.
Jefferies analysts said details of the split, talks of which
were first disclosed by the company in April, were in line with
its expectations.
Tate & Lyle will focus on its food and beverage business
that makes low-sugar, low-calorie ingredients that go into
drinks, soups, sauces and bakery, while the new company will
produce plant-based products for food and industrial markets.
"With the pandemic accelerating the trend towards healthier
food, now is the right time to focus our business on capturing
this growth," Tate & Lyle Chief Executive Nick Hampton said.
The new company will consist of the primary products
business in the Americas that makes bulk sweeteners, industrial
starches and animal nutrition, and an interest in its Almex and
Bio-PDO joint ventures. The smaller European operations would
remain with Tate & Lyle, it said.
The company said the deal would see it substantially cut its
exposure to commodities markets and bulk ingredients in North
America.
The split is expected to complete in the first quarter of
2022 following approval from shareholders and regulators.
($1 = 0.7194 pounds)
(Reporting by Yadarisa Shabong in Bengaluru; Editing by Kirsten
Donovan, Rashmi Aich and Uttaresh.V)
