Ingredion, a US-based producer of food and beverage ingredients, has finalized an agreement to acquire its UK-based competitor, Tate & Lyle, for £2.7 billion, equivalent to $3.6 billion in cash.

The two companies announced on Monday that their respective boards have agreed to terms under which Ingredion will pay 595 pence per share for Tate & Lyle. This offer represents a 59% premium over the stock's closing price last month, prior to the emergence of acquisition rumors.

Both parties stated that the entire board of Tate & Lyle has unanimously agreed to recommend the takeover proposal to its shareholders.

Ingredion indicated that the merger will combine the complementary product portfolios and global geographic reach of the two firms, enriching its own product offerings and unlocking new growth opportunities. The combined entity is projected to have annual revenues of approximately $9.9 billion and adjusted EBITDA of around $1.8 billion.

Context of the Industry

This transaction follows closely on the heels of a deal by Ingredion's larger US peer, International Flavors & Fragrances (IFF), which recently agreed to sell its food ingredients business to private equity giant CVC Capital Partners. That food ingredients unit, including debt, was valued at $4.3 billion.