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April 26, 2021, 9:04 a.m. EDT

Tate & Lyle surges on sweetener unit deal talks

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By Steve Goldstein

Tate & Lyle shares rose as much as 7% on Monday after the food and ingredients maker said it was in talks to sell most of its primary products division.

The announcement from Tate & Lyle /zigman2/quotes/205109332/delayed UK:TATE +1.96% came after the Sunday Telegraph reported it has held talks on auctioning the artificial sweetener making unit off for £1.2 billion ($1.66 billion), possibly to a private-equity firm.

Analysts were excited about the prospect of Tate & Lyle’s food and beverage solutions unit trading as a separate entity. Analysts at Barclays Capital said even at 18 times enterprise value/earnings before interest and tax, the unit still would trade at a discount to Kerry /zigman2/quotes/202059924/delayed IE:KRZ +2.32% , DSM /zigman2/quotes/205433811/delayed NL:DSM -0.44% and Symrise /zigman2/quotes/207710023/delayed XE:SY1 +0.89% .

In the six months to Sept. 30, the food and beverage solutions arm recorded an adjusted operating profit of £98 million on revenue of £475 million, and the primary products unit recorded an adjusted operating profit of £83 million on revenue of £842 million.

A clean exit might not be possible, and Tate & Lyle implicitly acknowledged this by saying it is in talks to sell a “controlling” stake. Analysts at Jefferies point out that two major U.S. plants for Tate & Lyle make products both for the primary products as well as food and beverage solutions division. Another issue, the analysts noted, is that Tate & Lyle currently benefits from the ability to offset U.K. tax losses against U.S. profits, a benefit it wouldn’t enjoy as much in a joint venture scenario.

The FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +1.19% meandered on Monday, ahead of a big week for earnings including the latest results from electric vehicle maker Tesla /zigman2/quotes/203558040/composite TSLA -6.42% after the close of trade on Wall Street. In early afternoon trade, the FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +1.19% rose 0.3%, just 1% below its April 19 high.

Also on the move, U.K. engineering group IMI /zigman2/quotes/203470444/delayed UK:IMI +1.83% rallied 11% after lifting its earnings guidance by 7% and launching a £200 million stock buyback program.

/zigman2/quotes/205109332/delayed
UK : U.K.: London
754.50 p
+14.50 +1.96%
Volume: 896,444
May 20, 2022 4:35p
P/E Ratio
13.69
Dividend Yield
4.79%
Market Cap
£3.00 billion
Rev. per Employee
£467,012
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/zigman2/quotes/202059924/delayed
IE : Ireland: Dublin
96.28
+2.18 +2.32%
Volume: 238,482
May 20, 2022 4:30p
P/E Ratio
22.40
Dividend Yield
0.99%
Market Cap
€17.03 billion
Rev. per Employee
€334,118
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/zigman2/quotes/205433811/delayed
NL : Netherlands: Euronext Amsterdam
136.05
-0.60 -0.44%
Volume: 602,526
May 20, 2022 5:35p
P/E Ratio
N/A
Dividend Yield
1.84%
Market Cap
€23.35 billion
Rev. per Employee
€430,939
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/zigman2/quotes/207710023/delayed
XE : Germany: Xetra
102.20
+0.90 +0.89%
Volume: 302,140
May 20, 2022 6:30p
P/E Ratio
37.85
Dividend Yield
1.00%
Market Cap
€14.28 billion
Rev. per Employee
€344,802
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/zigman2/quotes/210598409/delayed
UK : FTSE UK
7,389.98
+87.24 +1.19%
Volume: 722,321
May 20, 2022 4:56p
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/zigman2/quotes/203558040/composite
US : U.S.: Nasdaq
$ 663.90
-45.52 -6.42%
Volume: 48.32M
May 20, 2022 4:00p
P/E Ratio
90.09
Dividend Yield
N/A
Market Cap
$687.81 billion
Rev. per Employee
$626,347
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/zigman2/quotes/210598409/delayed
UK : FTSE UK
7,389.98
+87.24 +1.19%
Volume: 722,321
May 20, 2022 4:56p
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/zigman2/quotes/203470444/delayed
UK : U.K.: London
1,282.00 p
+23.00 +1.83%
Volume: 478,125
May 20, 2022 4:35p
P/E Ratio
17.50
Dividend Yield
1.85%
Market Cap
£3.34 billion
Rev. per Employee
£166,118
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