Further Acqn. of Interest
Tate & Lyle PLC
8 June 2000
Tate & Lyle PLC - Proposed acquisition of the minority interests in Amylum and
Staley
Tate & Lyle PLC ('Tate & Lyle' or the 'Group') announces that it has reached
agreement with Compagnie Industrielle et Financiere des Produits Amylaces S.A.
('CIP') to acquire, for a total consideration of £274 million, the minority
interests held by CIP in Amylum (36.7 per cent) and Staley (10.0 per cent),
Tate & Lyle's European and US starch subsidiaries.
On completion, Tate & Lyle will own 100 per cent of Amylum and Staley.
The consideration will be satisfied by the payment to CIP of £210 million in
cash, with the balance satisfied by the issuance of 24.08 million new Tate &
Lyle shares (the 'Consideration Shares'). The Consideration Shares will be
issued credited as fully paid, and will rank pari passu in all respects with
Tate & Lyle's existing ordinary shares, except that they will not rank for the
final dividend in respect of the 18 months ended 25 March 2000, to be paid on
2 August 2000.
It is expected that, in the first full year of ownership, the transaction will
have a positive return over the cost of capital before goodwill amortisation,
and enhance earnings per share.
The acquisition of the minority interests in Amylum and Staley is conditional
on EU merger approval, and listing of the Consideration Shares in the Official
List and their admission to trading by the London Stock Exchange.
On completion, Amylum will be integrated with other Group businesses. Frank
Karsbergen will continue as Chief Executive of Amylum reporting to Tate & Lyle
Chief Executive, Larry Pillard, who will also be Chairman of Amylum.
On completion, Carole Piwnica will remain a non-executive director of Tate &
Lyle and will also become Non-Executive Vice-Chairman - Government Affairs for
Tate & Lyle. On completion, she will enter into a three year consultancy
agreement with the Group. Commenting on the proposed acquisition, Larry
Pillard, Chief Executive of Tate & Lyle said:
'We expect to derive significant efficiencies over time from the integration
of the Amylum business into the Tate & Lyle Group, beginning in the first full
year of operation.
'This acquisition, together with the disposal of Bundaberg, marks a clear
strategic step for the Tate & Lyle Group, enabling us to focus on the
development of the combined businesses of Amylum and Staley as leading value
added processors of carbohydrates. Both Amylum and Staley are world-class
businesses, with complementary skills, technologies and markets. We will now
be able to achieve full transfer of these skills and technologies and create
an integrated approach to product development and marketing.
'This approach offers powerful prospects for better servicing the requirements
of our customers around the world and increasing the already significant
contribution of value-added products within the Tate & Lyle Group.
'I am delighted that Carole Piwnica has agreed to remain a non-executive
director of Tate & Lyle and I am confident she will make a major contribution
in her new role assisting us with our government relations activities.
'I look forward, both as Tate & Lyle Chief Executive and Chairman of Amylum,
to taking the combined businesses forward and realising their full potential.'
Expected benefits from the proposed acquisition
The full integration of Amylum into the Tate & Lyle Group will give rise to
widespread savings and efficiencies and product development opportunities.
These include:
- Organisation enhancement: Organisation between Amylum and the rest of the
Tate & Lyle Group will be optimised in many areas, including: IT, sales and
marketing, purchasing, supply chain, finance and administration, operations
and engineering, and human resources. This will also reduce costs.
- Improved efficiencies: Tate & Lyle believes that there will be significant
scope to improve efficiency through applying best practices from both
businesses in the enlarged Tate & Lyle Group.
- Sales and marketing: The Tate & Lyle Group will be better positioned to
serve an increasingly global customer base. The integration of the two
cereal sweeteners and starch businesses will give rise to enhanced cross
selling and export opportunities and greater efficiency in servicing export
markets.
- Research and development: The current ownership structure of Amylum has
limited the full transfer of product and process technology between Tate &
Lyle and Amylum. The proposed acquisition will enable Tate & Lyle to
integrate its research and development capabilities and leverage the
respective expertise of Tate & Lyle and Amylum on a global basis. This will
greatly enhance development opportunities, particularly in value added
products, and facilitate production cost savings across the Group.
Financing
The cash consideration for the proposed acquisition will be funded from Tate &
Lyle's existing banking facilities.
Information on Amylum and Staley
Amylum is one of the leading producers of cereal sweeteners and starches in
Europe. Its principal operations are in France, Belgium, the UK, Spain,
Holland, Italy and Greece. It is also a leading manufacturer of sweetener
products in Eastern Europe through its Eaststarch joint venture.
Staley is one of the top three corn wet millers in the US. The integration as
a product line within Staley of the global citric acid business, Tate & Lyle
Citric Acid, which was acquired from Bayer in 1998, has added significant
capability in value added fermentation to Staley's technology portfolio.
In the 12 months to 25 March 2000, the combined unaudited profit before tax
attributable to the minorities in Amylum and Staley was £21 million. The
combined unaudited net assets attributable to the minorities to be purchased
in Amylum and Staley at 25 March 2000 were £123 million.
Information on CIP
CIP is a private investment group based in Luxembourg.
It started to invest in starch and products derived from starch in the
previous century. Its main investments are in Amylum and Staley.
ENQUIRIES:
Charles King 020-7626-6525
Chris Fox 020-7626-6525 (Press)
Notes to Editors
Summary
- Tate & Lyle is a global leader in carbohydrate processing. Its principal
operations are in Europe and the US. Its brands and high quality
ingredients add value to consumer products around the world.
- Amylum is one of three leading producers of cereal sweeteners and starches
in Europe.
- Amylum is also a leading manufacturer of sweetener products in Eastern
Europe through its Eaststarch joint venture.
- Staley is one of the top three corn wet millers in the US.
- CIP's current direct and indirect ownership of Amylum and Staley is 36.7 per
cent and 10.0 per cent respectively.
- On completion of the proposed acquisitions, Tate & Lyle will have 100 per
cent ownership of Amylum and Staley while CIP will be issued with a 5.0 per
cent holding in Tate & Lyle.
Tate & Lyle's investment in Amylum dates from 1976, when it acquired a 33.3
per cent interest in the business, making it an equal partner with CIP and
Staley. With Tate & Lyle's acquisition of Staley in 1988, Tate & Lyle became
the majority shareholder in Amylum with an additional 33.3 per cent owned
through Staley.
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