UK sugar and sweetener company Tate & Lyle has announced today (Monday) the signing of agreements to acquire US specialty food ingredients company Continental Custom Ingredients and the Italian based Cesalpinia group of companies.
The transactions are expected to be completed by the first quarter of the 2006 calendar year for a total consideration of GBP74m (US$128m).
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 GBP40m, made up of cash of GBP36m plus assumption of CCI net long term debt estimated at GBP4m. 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 & Lyle’s cost of capital in the first full year of operation.
Cesalpinia Foods is owned by Italian company MARE Group. It was established in the 1960s 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 & Lyle’s 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 GBP34 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 & Lyle’s cost of capital in the second full year of operation.
“These bolt-on acquisitions are an excellent fit with Tate & Lyle’s stated growth strategy” said Iain Ferguson, Tate & Lyle’s 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 & Lyle’s broad product range, operational scale and sophisticated research capabilities” he said. “Together we will be more responsive in developing distinctive and innovative solutions for the food industry as part of our value added growth strategy.”