Tate & Lyle (1K) | Hold | Difficult trading, awaiting a bid

Research evidence excerpt

Tate & Lyle (1K) | Hold | Difficult trading, awaiting a bid

Tate & Lyle Hold | Target Price: 547.0p

Company description Management

Tate & Lyle is a North American-focused provider of ingredients and solutions to food Nick Hampton, CEO

and beverage companies, with a strong heritage in corn-derived products. It has a Sarah Kuijlaars, CFO David Hearn, Chairman

strong franchise in the area of sugar and calorie reduction and operates through two

business units: a Food & Beverage Solutions unit focusing on low-sugar and high-fibre Key shareholders

products, and Sucralose. In 2024, the company completed the exit from its low growth Free float 83.00% Huber 16.80%

and margin Primary Products unit and bought CP Kelco for USD1.8bn. Ameriprise 5.50%

Vanguard 5.30%

Investment case Valuation methodology

n Organic growth acceleration. n DCF with a 9% WACC and 2% long-term growth .

n Deliver the synergies following the merger with CP Kelco and n We use an EV/EBIT comparison its own historical valuation

growth the EBITDA margin.

Risks to our ratingn Take out bid by Ingredion.

n The rerating may take much longer than we anticipate or not

Catalysts occur at all.

n Reporting good and consistent organic growth as a new n Cost inflation is affecting T&L at multiple levels. Although the

company. group has been successful in offsetting cost inflation in 2021-

n Increasing understanding of prospects for new company. 22 and the CEO seems quite confident about the company’s

n Delivery of the cost savings and top-line synergies related to ability to raise prices, we cannot rule out a scenario in which

the CPK deal. such price increases might not fully materialise.

n A weak US dollar, with every one-cent change in the US dollar

having a GBP1-1.5m impact on PBT.

Key data charts