Ingredion to buy UK's Tate & Lyle for $3.6 billion

June 8 (Reuters) - U.S. group Ingredion has struck a deal to buy Britain's Tate & Lyle for £2.7 billion ($3.6 billion) in cash to create a leading speciality food and beverage ingredients company.

The deal underscores how food companies are reshaping portfolios to tap demand for lower-sugar, higher-protein and functional products with added health and nutrition benefits, even as weak consumer sentiment weighs on near-term growth.

Tate & Lyle shareholders will receive 595 pence per share in cash, a premium of nearly 59% to the last closing before talks were disclosed in mid-May, plus 20 pence in dividends. The deal values the British group at £3.8 billion including debt.

Tate & Lyle shares, up more than 30% since the talks became public, were up 12.7% to 554 pence at 0811 GMT. The deal will end Tate & Lyle's 87-year listing in London, marking another loss of a household name for the UK market.

A wave of foreign bids has put Britain on track for a record year for dealmaking in 2026, with buyers attracted in part by comparatively cheap UK valuations.

FLAVOURS AND HEALTH

Tate & Lyle, which started as a sugar refinery in the 1850s, sold its eponymous sugar brand in 2010 to ASR Inc. to focus on sweeteners such as the zero-calorie Splenda brand used by Coca-Cola. Its 2024 acquisition of CP Kelco expanded it into plant-based ingredients.

Combined with Ingredion, the business will be worth about $9.9 billion and focus on ingredients that improve texture, cut sugar and boost nutrients, as food makers target demand for flavour and fibre, including amid the rise of GLP-1 weight-loss drugs.

Ingredion makes sweeteners and starches, as well as ingredients used in paper, cosmetics and pharmaceuticals.

In 2024, private equity firm Advent International was reported to be preparing a takeover bid for Tate & Lyle, but no offer materialised.

($1 = 0.7504 pounds)

(Reporting by Prerna Bedi in Bengaluru. Editing by Louise Heavens and Mark Potter)