WESTCHESTER, ILL. — The pending acquisition of Tate & Lyle PLC by Ingredion, Inc. will create a company ideally positioned to capitalize on ingredient trends driving new product development now and into the future, said James P. Zallie, president and chief executive officer of Ingredion.

“Following the combination, more than half of our revenue will come from Texture and Healthful Solutions, the fastest growth portion of our portfolio where customer and consumer demand remains strong and volume growth persists,” Zallie said in a conference call with investment analysts June 8.

The call followed Ingredion’s announcement that it had reached an agreement to acquire London-based Tate & Lyle for £2.7 billion ($3.6 billion) in cash. In Over-the-Counter trading June 8, when the deal was announced, Tate & Lyle shares jumped 13%, closing at $29.85. Ingredion shares were nearly unchanged.

“Several trends continue to shape product development and innovation,” Zallie said. “Consumers are looking for healthier products with reduced sugar, more protein and fiber and simpler labels with better nutritional profiles. They also continue to expect great taste and texture that provides an overall enjoyable eating experience. Affordability continues to remain a key consideration for both consumers and food manufacturers. The acquisition of Tate & Lyle strengthens Ingredion’s ability to address these trends.”

He added, “…Tate & Lyle strengthens our formulation expertise, enabling us to deliver more integrated, higher-value solutions that help customers meet performance and affordability needs.”

Zallie painted an upbeat financial picture of the impending transaction, noting the combined business would generate $10 billion annually in revenue and $1.8 billion in adjusted EBITDA, equating to an EBITDA margin of 18.1%. Tate & Lyle’s business accounts for about 27% of the combined revenues and 32% of combined EBITDA.

“Additionally, we expect a significant run rate net cost synergy opportunity of approximately $130 million by full year 2030 with one-time cash costs of $175 million,” he said. “We expect the transaction to be more than 15% accretive to adjusted EPS in the first full calendar year following the acquisition.”

Ingredion said it will finance the acquisition through a combination of cash reserves, new debt financing and, if extent required, a drawdown on a fully committed bridge financing facility.

Zallie projected that Ingredion’s balance sheet would show net debt levels at three times adjusted EBITDA, a figure he said is expected to fall to about 2.5 times within 18 months.

The Ingredion/Tate & Lyle combined business would operate about 65 manufacturing plants around the world together with 50 innovation centers staffed by more than 800 scientists. The company would have 2,700 patents either granted or pending.

“That scale matters because while many of our customers increasingly operate globally, their formulation needs are highly localized,” Zallie said. “They desire innovation partners that can help them develop solutions for local and regional tastes that meet consumer preferences and regulatory requirements. With this transaction, we will have broader manufacturing capabilities, a larger innovation network, enhanced local-for-local service and deeper technical resources.”

Responding to analysts’ requests for a more in-depth description of how the two businesses complement one another, Zallie offered several examples, including Tate & Lyle’s leading position in pectin, thanks to its 2024 acquisition of CP Kelco.

“Ingredion does not have any pectin,” he said. “We don’t have any carrageenan to speak of, gellan gum and products such as that.  So those are nice portfolio complements. Protein fortification. Ingredion is a leader in plant-based protein with pea protein isolate.”

He also cited Tate & Lyle’s leadership in fiber fortification and soluble fiber, noting that Ingredion “does not have much in the way of soluble fibers.” On the other hand, Ingredion has a far stronger position in South America, he added.

“All of these are compelling complementary elements,” Zallie said. “Also, the geographic supply network is incredibly important for customers on what they’re looking for from trusted suppliers that have redundancies in their network to assure more reliable supply. One of the things that the pandemic exposed is the frailty of the global supply chain network.”

The broader manufacturing and footprint created by the combined companies will improve Ingredion’s ability to serve across its network as a reliable, cost-effective supplier, Zallie said.

“We believe these capabilities will make Ingredion the partner of choice for customers,” he said.

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