Ingredion Inc.: Conditional Offer to Buy Tate & Lyle

Research evidence excerpt

Ingredion Inc.: Conditional Offer to Buy Tate & Lyle

Barclays | Ingredion Inc.

Combined Financials FY25 FY26e FY27e FY28e

YoY Growth (bps) 127 (66) 57 8

Tate FY ends in March and reports semi-annual figures. These estimates are for illustrative purposes only and align a

majority of Tate's operating year with INGR's.

Source: Company reports, Barclays Research estimates

In the event of an approved, all-cash offer, we would expect combined net debt to reach

~$5.9bn given the current offer price as well as the need to issue additional debt to fund the

deal. Working from combined FY26E EBITDA of ~$1.75bn, we find that leverage would reach

~3.4x. However, given solid FCF yields and expectations for each company, we believe leverage

could be lowered to ~2.9x in ~12 months assuming a large focus on paying down debt.

Additional strength in FCF generation could lead to leverage below ~2.4x within 24 months, on

our estimates.

FIGURE 5. Combined Entity Proforma Leverage (Illustrative)

in mn USD except leverage FY26E FY27E FY28E

Net Debt Estimate 5,900.0 5,296.0 4,596.0

Adj. EBITDA Estimate 1,746.9 1,849.4 1,902.8

Leverage 3.4x 2.9x 2.4x

Combined Estimated FCF Generation 604.0 700.0 1,024.0

Additionally, we see scope for meaningful upside from synergy potential early on within the

deal, mostly stemming from headcount reductions on back office department consolidation.

Assuming an illustrative ~$100mn in incremental cost savings through these initiatives, we

could see continued margin expansion closer towards 19%, which would lower leverage

through additional debt payments and higher EBITDA. Longer-term, we would expect savings

through the optimization of the company's production network, sales base, and asset footprint.

FIGURE 6. INGR & Tate Potential Synergies (~$100mn per Year)