Tate & Lyle Share Discussion Threads

[cfro] 18/8/2021 15:53

Jim Stutelberg sold 110k shares. He is president of the Primary products division.

Perhaps he see's his job vanishing if the deal goes through?

[essentialinvestor] 17/8/2021 16:42

* Smiths Group recent announcement of their medical division sale
went down like a bucket of cold sick, so not just Tate!.

[spoole5] 17/8/2021 16:34

Probably the only stock in the 350 where the announcement of a deal has killed the price!

[cfro] 13/8/2021 11:32

You can never tell, so i wouldn't rule anything out. A bid could still happen here both pre-deal and even post-deal.

[spoole5] 13/8/2021 10:20

Maybe this weakness will snuff out a full bid

[essentialinvestor] 10/8/2021 10:30

Depends on large institutional holders, they don't like the deal it does not happen.

[spoole5] 10/8/2021 09:13

Will this deal survive?

[essentialinvestor] 05/8/2021 11:41

Risk is TATE spaff the proceeds on some highly priced acquisitions,
the current CEO strikes me as cautious so would be disappointed if that were
to occur.

It's a sellers market atm, not the time to acquire, very generally speaking,
as valuations are sky high across the board.

[spoole5] 05/8/2021 00:17

Think you will get your sub 700. Not much enthusiasm for the deal.

[tornado12] 03/8/2021 12:44

Was looking for sub 700p to top up my stock holding, but doesn’t look anytime soon will happen. The special divi will arrive next year and I think there could be more T/O interest in Tate into 2022. It’s a solid business with divi well covered . Watching and waiting patiently ! Kicking myself for not buying sub 600p last year !

[cfro] 30/7/2021 18:06

This audio complete with slides from the AGM is worth a listen if anyone has missed it:



The CEO walks through the results then talks about the proposed deal giving some info on what the next five years will look like - single digit revenue and profit increases, margin expansion, increases in ROCE and dividend policy.

[housemartin2] 22/7/2021 14:15

Agree that value can be retained in the business or distributed and either way shareholders own that value. However if value is more retained and less distributed, then this is a change of strategy that will probably cause some share price volatility. Its value shareholders v growth shareholders I guess.

It was increased share price volatility I was thinking about

Personally I try to be a long term holder of stocks and try to ignore short term movements. (Not always easy.) If I have confidence in my research, then its short term noise. I am invested in TATE because I think what they are now doing has potential for growth BWDIK. (previously I had been invested in TATE as an income stock !)

[cfro] 22/7/2021 13:23

Giving up 50% of an extremely cash-generative division will ultimately mean a reduction of the dividend yield going forward.

It may mean falling from 4% now to maybe say 3% but that will be mitigated at least in the short term by the special dividend. But obviously we don't know what future dividend payouts will likely be, so we dont know what they may or may not yield in the future.

As the food and beverages division then becomes the main part of the business, what the management and shareholders would hope for is a re-rating of the business so that the capital gains somewhat make up for lack of dividend income.

As the the new business then grows that should mean increasing dividends in the future plus if the new owners of the primary products business also grows that then we should get to enjoy 50% of future cashflow there too with luck.

[pierre oreilly] 21/7/2021 18:30

Divis are pretty neutral. Pay out 10mill in divis, the value of the business drops 10mill. If they don't pay divis, then the subsid value increases greater than it would have had it paid divis. six of one etc.

[housemartin2] 21/7/2021 14:43

Sure. So they might want to keep hold of the cash flow to fund expansion. My point was that we should perhaps discount any dividends to TATE from this source in future ? What would that mean for TATE current dividend ?

[pierre oreilly] 21/7/2021 13:44

It will operate as a subsid, with control over everything with the other party. Any divi that subsid pays will be received by tate, and tate directors will control the tate divi.

It's almost a certainty that the subsid managers have other businesses complementary to the commodities business so synergies can be exploited. That's almost certainly why they have been granted control.

[housemartin2] 21/7/2021 11:53

Having 50% of the commodities business but not managerial control, does that not mean that the other party controls the cash for that business ? We may own 50% of the cash flow but the other party decides dividends ?

[essentialinvestor] 19/7/2021 18:45

Their bulk commodities business is cyclical, depending on corn prices, the
annual grain harvest, coproducts pricing etc.

FWIW I was against a sale of 100% of that business, 50% looks a better option.

Worth looking at the 2021 guidance Tate provided at the FY results and that
appears to be lower pre tax and earnings over the next 12 months.
This is because of lower expected returns from the commodity business.


In terms of loss of earnings from a 50% sale stake, as TATE intend to return proceeds by way
of a share consolidation, that should largely cancel out lost earnings.

[cfro] 16/7/2021 11:14

The market doesn't know anything so you just can't judge it by that and certainly not over just a few trading sessions.

If the new owners of the primary products division - KPS - do what they say they intend, then giving up control is 100% the right thing to do. No telling but i suspect Primary Products will most likely become even more cash generative under their management and guidance and TATE still retain 50%.

This deal will need to get the support of the major Institutions - if they don't like it they will vote against itand stop it or they may push for a complete takeover.

Ameriprise Financial have continued to increase their stake - so clearly they like it.

[spoole5] 16/7/2021 10:44

I would suggest it is the latter. Giving up control of a very cash generative business.

[wad collector] 16/7/2021 10:10

Whatever our interpretation of the merits (or otherwise) of this deal, the share price has dropped since the announcement. So either the Market is wrong and the benefits underestimated, or the deal does not enhance value for the shareholders.

[spoole5] 15/7/2021 08:13

.....almost there!!

[spoole5] 14/7/2021 16:13

Looks like the board are destroying value not creating it!

[spoole5] 14/7/2021 11:42

Now down 4% since the deal was announced.