Cargill has been named as a potential bidder for Tate & Lyle and Danisco, the Danish food ingredients maker that last week agreed a sale to DuPont, the US chemicals group.
The possible Cargill targets were put forward by UK consumer analyst Andy Ford at brokers MF Global and came after news in the US yesterday that the agribusiness giant was spinning off its fertilizer operations, Mosaic Co.
In a research note, Ford said the Mosaic deal increased Cargill’s “financial flexibility” and put the US group in the frame to be a “potential bidder” for Tate & Lyle.
Ford said that, since Tate & Lyle decided in July to quit the sugar sector, the UK company had become “a pure-play food and industrial ingredients company, with an under-leveraged technology pipeline”.
He added: “A combination between Cargill and Tate would help to consolidate the still fragmented US HFCS market as well as providing complementary technologies in food science. We would see minimal anti-trust issues and a strong geographic fit.”
Ford’s comments led to Tate & Lyle’s shares jumping in London today (19 January). Tate & Lyle’s stock was up 6.8% at 574.5p at 15:55 GMT this afternoon.
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The MF Global analyst also cited Danisco as a possible Cargill target. Last week, Danisco’s board agreed to a US$6.3bn takeover bid from DuPont. Danisco directors said the DKK665-a-share offer from DuPont represented “a strong value proposition” for the company’s shareholders and the US group said it expected the deal to close “early in the second quarter”.
Analysts, including Ford, played down the prospects of a rival bid for Danisco. Ford said it was “unlikely” a rival bidder would be able to extract more synergies from the business.
However, today, Ford said Cargill could be a potential counter-bidder for Danisco as the Mosaic transaction has given it the “resources to launch a substantially higher counter-offer”.
Danisco’s shares were up 0.5% at DKK662 at 17:11 CET this afternoon.