Mark Kleinman: Tate & Lyle’s sweet deal isn’t just for taste
Mark Kleinman is Sky News’ City Editor and the man who gets the Square Mile talking in his weekly City PM column. Today, he looks at Tate & Lyle’s , the Telegraph auction and a Staveley’s pitchside plays
Tate & Lyle’s sweet deal isn’t just for taste
Anyone for a sweetener? It’s been years since Tate & Lyle owned the sugar business for which its brand was famous in British households. Now, its refocusing on the niche of ‘speciality food solutions’ is about to take a big leap forward.
Last month’s £1.4bn acquisition of CP Kelco, a US-based peer, surprised the stock market and left analysts and shareholders underwhelmed, with the stock falling since the morning of the announcement.
Not all investors, to be fair, were sceptical. Jeremy Smith, co-head of UK equities at Columbia Threadneedle Investments, which holds a stake of about 6 per cent in Tate & Lyle, said he was “excited by the future combined business being created by this deal”.
Smith added that it would “put Tate & Lyle in a strong position as a leading science-based innovation partner to the food and beverage industry, enhancing its opportunity to re-enter the FTSE 100”.
That’s the glass half-full version. But I understand that there’s an additional subtext in the shape of Rosebank Industries, the newly listed venture formed by the founders of Melrose Industries.
City sources say that Tate & Lyle has appeared prominently on the list of targets considered by Rosebank as a blockbuster acquisition.
With a market capitalisation of £2.45bn, raising that kind of money would be a stretch even by the standards of this seasoned team of dealmakers.
Then there’s the question of whether Rosebank could organise itself sufficiently quickly to be an interloper in the Tate & Lyle/CP Kelco transaction.
Under reforms to the UK listing rules confirmed by the Financial Conduct Authority last week, it’s unlikely that Tate & Lyle will need to seek shareholder approval for its transatlantic swoop, thereby shortening the timetable for the deal’s completion.
People close to Rosebank – which I’ve learned also held discussions about a privately funded vehicle with Elliott Advisers, Fortress Investment Group and others – acknowledge that Tate & Lyle has been on its target list, but insist it is not now on its agenda.
While the FTSE-250 company says buying CP Kelco will bolster its so-called ‘mouthfeel’ capability, it looks like the Melrose founders will need to find an alternative acquisition to swallow.
Read all about it: Telegraph auction at risk of flopping
Stop the presses? Tomorrow’s deadline for indicative offers for The Daily Telegraph and The Spectator is yet another a milestone in a year-long saga.
Journalists on the titles shouldn’t hold their breath for a resolution just yet. With every week that passes, the chances of Abu Dhabi-based RedBird IMI recovering the £600m it brazenly paid for a call option aimed at handing it control seem more remote.
The decision by the publisher of the Daily Mail to abandon a bid came as little surprise. Sources close to the process say that DMGT did not even sign the non-disclosure agreement provided by the bankers overseeing the process.
Far more startling would be Sir Paul Marshall folding his copy of the Telegraph and walking away. As I reported on Sky News earlier in the week, that has become a genuine option for the Marshall Wace co-founder and GB News shareholder.
Whether this is mere posturing is unclear, but without Marshall or DMGT’s proprietor, Lord Rothermere, the Telegraph auction would be in danger of turning into a serious flop. Moreover, rumoured bidder CVC Capital Partners is unlikely to participate.
Marshall could, according to people close to the process, still opt to table a credible standalone bid, or join forces with other interested parties.
As things stand, though, David Montgomery’s National World, which would need to go through a complex financing process; Lord Saatchi; and Mediahuis, the Belgian media group are the only other contenders to have been outed.
The Telegraph’s recent financial performance has been solid, but £600m for the papers and The Spectator looks like a tall order when at least one of the leading bidders have fallen away.
RedBird itself might see that as an opportunity to bid with a new partner instead – but right now a big loss for the thwarted would-be owner seems like the only guaranteed front page story.
Staveley’s final whistle – but could she be looking for extra time?
And there goes the final whistle. The end of Amanda Staveley’s involvement with Newcastle United FC, three years after orchestrating the controversial deal for Saudi Arabia’s sovereign wealth fund to take control, cements the Gulf investor’s grip on the Tyneside club.
The sale, which came just days after Staveley played down suggestions that she had any plan to offload her stake, leaves her without any involvement in English top-flight football. Or does it?
Sources close to the transaction say that although she only held a small minority stake, it still netted her a multimillion pound profit.
Her ambition, according to football insiders, is to assemble an offer for a stake in another club, with Tottenham Hotspur said to be at the top of her list. The north London club has publicly stated that it is seeking a capital injection to expand its financial headroom and provide funds for investment.
There remain no shortage of Premier League sides which are on the hunt for new owners, with Brentford, Crystal Palace, West Ham United and Wolverhampton Wanderers all also interested in attracting minority or controlling investors.
Talk about changing her Toon.