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Tate & Lyle shares sweeten on hopes of breakup deal but analysts fret about complications

Jim Armitage
·1-min read
 (Evening Standard / eyevine)
(Evening Standard / eyevine)

Tate & Lyle shares jumped more than 6% after it admitted it was in talks to split itself in two and find a buyer for its Primary Products bulk sweeteners and industrial starches unit.

Analysts today welcomed the news in principle, saying it could allow more management time to spent on the higher margin food and beverage solutions arm.

But there were cautious noises, perhaps explaining why the share price rise was not higher.

Jefferies analyst Martin Deboo said a breakup of the group could lead to a higher stock market valuation of the company.

However, he warned that it could be difficult to split the groups out because some major factories in the US produce both sets of products, so would have to be disentangled somehow.

Deboo also pointed out the potential pitfalls in the deal of how much of the fixed cost of running primary products would stay with Tate & Lyle.

The deal could also see Tate & Lyle facing a higher tax charge, as it currently offsets UK tax losses against US profits.

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