Tate & Lyle and Ingredion Reach Takeover Agreement Pending Shareholder Vote and Regulatory Approval

Key Morningstar Metrics for Tate & Lyle

• Fair Value Estimate
  : GBX 632
• Morningstar Rating
  : ★★★★
• Morningstar Economic Moat Rating
  : Narrow
• Morningstar Uncertainty Rating
  : Medium

Tate & Lyle TATE‘s and Ingredion’s boards of directors reached an agreement on the terms of Ingredion’s all-cash proposal to acquire 100% of Tate & Lyle, in line with the consideration announced on May 14. Tate & Lyle shares gained approximately 14% on June 8 following the announcement.

The bottom line: We confirm our fair value estimate for narrow-moat Tate & Lyle at GBX 632 per share, reflecting a probability-weighted GBX 615 offer price per share and our standalone intrinsic value estimate at an 85% deal completion probability.

• While we expect Tate shareholders to support the proposed transaction—given the meaningful premium to the current share price and the unanimous board recommendation, regulatory risk remains.
• We see the majority of the two companies’ portfolios as complementary; however, overlaps in starches and sweeteners may attract regulatory scrutiny and could result in forced divestitures. We do not expect such divestitures to be material, though we note Ingredion retains a standard right to withdraw should any required remedies prove value-destructive.