Tate & Lyle said Ingredion is in talks over a 2.74 billion pound ($3.7 billion) takeover that would pay shareholders up to 615 pence a share, including dividends.
The proposal values Tate & Lyle at a 64% premium to Wednesday's close and could create a food and beverage ingredients group worth more than $10 billion.
Tate & Lyle shares climbed as much as 55% to about 580 pence, while Ingredion fell 2.8%, reflecting investor optimism on the target and caution on the buyer.
Both companies are chasing growth as demand shifts toward low-calorie, plant-based and clean-label products; Tate & Lyle has also been hit by weak U.S. bakery demand, lower European pricing and higher costs.
Ingredion now has until June 11 under UK takeover rules to make a firm offer or walk away.
Is Ingredion's billion-dollar bet on 'clean-label' a visionary move or a costly overreach for Tate & Lyle?
Will the merger of two food giants truly clean up our food labels or just concentrate market power?