Tate & Lyle: Margin pressure secondary to Ingredion interest

Research evidence excerpt

Tate & Lyle: Margin pressure secondary to Ingredion interest

LSE

lower our FY27 EBITDA margin forecast by a further 65bps to 19.6%, reflecting ongoing price 52 Week range GBP 6.10-3.20

reinvestment alongside higher cost inflation in part related to the delayed bio-gums production

consolidation in the US. This drives a modest 0.6% reduction to our EBITDA forecast to £396m,

broadly consistent with company guidance for flat EBITDA year-on-year before the c.$20m

impact from the delayed bio-gums reconfiguration in the US. As shown in Figure 4, our bridge

from FY26 to FY27 highlights headwinds from price investment, growth investment and broader

cost inflation, offset by delivery of CP Kelco synergies, ongoing productivity savings and some

volume/mix leverage. At the EPS level, our estimates decline by a larger 4.8%, reflecting

Source: IDC

additional pressure from higher depreciation, tax and interest (from higher net debt) Link to Barclays Live for interactive charting

assumptions.

Ingredion approach the key focus: Ingredion (covered by Ben Theurer) earlier this month European Consumer Staples

confirmed it had made a conditional all-cash offer to acquire Tate & Lyle at 615p per share (595p Alex Sloane

+44 (0)20 3555 0645plus 20p in FY27 dividend; see Conditional Offer to Buy Tate & Lyle), implying an equity value of

alexander.sloane@barclays.com

c.£2.7bn and a >60% premium to the undisturbed price, with discussions ongoing and a Barclays, UK

Takeover Code deadline of 11 June to formalise a bid. We see strategic logic given strong

Warren Ackerman

+44 (0)20 3134 1903

Barclays Capital Inc. and/or one of its affiliates does and seeks to do business with companies warren.ackerman@barclays.com

covered in its research reports.