Tate & Lyle Plc rose to its highest price in almost three years in London trading as analysts speculated Cargill Inc. might bid for the maker of the low-calorie sweetener Splenda.
Tate soared as much as 38.5 pence, or 7.2 percent, to 576.5 pence, the most expensive intraday price for the stock since March 2008. The shares traded up 5.5 percent at 567.5 pence as of 2:43 p.m. local time, valuing the company at 2.7 billion pounds ($4.3 billion).
Cargill, a closely held food and agriculture business in the U.S., said yesterday it would divest its stake in Mosaic Co., a fertiliser producer, over the next two years. The value of the deal could bring Cargill as much as $24 billion, according to MF Global.
“We now see Cargill as a potential bidder for Tate & Lyle,” Andy Ford, an analyst at MF Global in London, said today in a note. “A combination between Cargill and Tate would help to consolidate the still-fragmented U.S. high-fructose corn syrup market as well as providing complementary technologies in food science. We would see minimal antitrust issues and a strong geographic fit.” MF has a “sell” rating on the stock.
Tate, under the leadership of Chief Executive Officer Javed Ahmed, has sold its sugar refineries in the European Union and its molasses unit in order to focus on more profitable divisions including its global additives and food business. The company said first-half profit rose 59 percent as sales volume at its speciality food-ingredients unit increased.
Andrew Lorenz, a spokesman for Tate, declined to comment on the share price move today.
Corinne Holtshausen, a spokeswoman for Cargill in the U.K., said today that the company does not comment on rumors. “At any one time, Cargill is assessing numerous business opportunities.”
DuPont Co. agreed to buy Danisco A/S, a Danish maker of enzymes used in food and biofuels, earlier this month for $5.8 billion in cash and the assumption of $500 million in debt.