THE WHAT? Tate & Lyle, the British sweetener maker, announced a $1.8 billion acquisition deal to buy U.S.-based CP Kelco. This strategic move aims to boost Tate & Lyle’s specialty ingredients business and cater to the growing demand for plant-based products.

THE DETAILS The acquisition deal comprises $1.15 billion in cash and the issuance of 75 million new Tate & Lyle shares to CP Kelco’s parent company, J.M. Huber Corporation.  This transaction will result in J.M. Huber becoming Tate’s largest shareholder with a 16% stake and the right to appoint two non-executive directors to the Tate board. CP Kelco, known for its pectin, specialty gums, and other nature-based ingredients, has faced recent volume declines and margin pressures, raising investor concerns. The proposed transaction is expected to generate cost benefits of at least $50 million by the end of the second financial year post-completion.

THE WHY? The acquisition aligns with Tate & Lyle’s strategy to meet the increasing consumer demand for sustainable, plant-based products with fewer artificial additives. CEO Nick Hampton highlighted that the deal would help the company cater to the growing market for sustainable ingredients. Despite the strategic fit, Tate & Lyle’s shares fell by over 8%, reflecting investor apprehension about CP Kelco’s recent performance.