Speculation that US agribusiness giant Bunge could be ready to bid for UK ingredients maker Tate & Lyle has been met with uncertainty in the City.
Rumours emerged yesterday that Bunge could be considering a takeover offer for Tate & Lyle, pushing up the company’s shares.
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In a note to clients today, MF Global analyst Andy Ford said there was a “degree of credibility” in the speculation.
“The global food ingredients sector seems ripe for consolidation and Tate may yet emerge as predator or prey,” Ford said.
Last month, US chemicals maker DuPont secured the acquisition of Danish food ingredients company Danisco, a move that some industry watchers believe could spark consolidation in the sector.
Ford put forward a scenario where Bunge could buy Tate on a 25% premium, which, he said, would require “a sizeable rights issue” from the US company and lead to “potential EPS dilution that we estimate in the range of circa 8-12% pre-synergies”.
However, he added: “Synergies should be substantial in the US, especially in the starch and high fructose corn syrup business segments, which would mitigate such dilution.”
Nevertheless, elsewhere in the City, there was caution. One unnamed analyst told just-food that rumours had been around Tate & Lyle “for years and get recycled every three months”.
The analyst added: “There’s nothing to suggest there’s any more truth in it this time than there has been the previous dozen.”
