Tate & Lyle ditches shareholder vote for planned £1.4bn takeover

Tate & Lyle has become the latest company to take advantage of recent listing rule reforms, announcing that it has dropped plans to put a proposed £1.4 billion acquisition to a shareholder vote.
Under the former rules, the food company’s purchase of the US ingredients maker CP Kelco would have been categorised as a class 1 transaction, a deal equivalent to more than 25 per cent of the company that would therefore have had to have been put to shareholders.
Since the original Tate announcement in June, the Financial Conduct Authority has watered down the rules as part of a plan to make London a more attractive listing destination for entrepreneurs and to deter London-listed companies from defecting to other exchanges.
“Accordingly, Tate & Lyle and Huber [the seller of CP Kelco] have agreed that the condition under the sale and purchase agreement to seek approval for the proposed transaction from Tate & Lyle’s shareholders will no longer apply,” Tate said.
The listing rule reforms in July were widely welcomed by the London Stock Exchange and by lawyers and brokers that make revenues from flotations. Pension fund investors were concerned, though, that the lower standards might attract problem companies to London and allow founders to conduct deals that improperly disadvantaged outside investors.
Now neither large deals that cross the 25 per cent threshold nor so-called “related party deals”, where the directors face potential conflicts of interest, have to be put to shareholders. Companies with no track record also face fewer obstacles to floating.
One of the first listed companies to take advantage of the new regime was Hammerson, which said it would not be putting a £600 million property disposal to shareholders. This week Vodafone said it would no longer put the €8 billion sale of its Italian subsidiary to Swisscom to a shareholder vote, nor the proposed merger of Vodafone UK with Three UK.
Tate is to pay Huber £905 million in cash and issue it with £510 million in new Tate shares in payment for CP Kelco. That will give Huber 16 per cent of the enlarged share capital. It has also been given the right to appoint two non-executive directors to the Tate board.
CP Kelco is a producer of ingredients that improve the so-called “mouthfeel” of processed products such as yoghurts, sauces and dressings, making them taste creamier or more velvety, and making biscuits and cereals feel crunchier.
The proposed deal was initially poorly received, with analysts pointing to a recent disappointing financial performance by CP Kelco. Tate shares initially dropped from 677p to 600p in the days after the announcement, but have since rallied. They closed yesterday up ½p, or 0.1 per cent, at 669p.