ABF Makes Offer to Take Full Control of Africa’s Biggest Sugar Producer

09 Feb 2016 --- Associated British Foods (ABF) has made an approach to buy the remaining shares in Africa’s top sugar producer.

ABF, the British food processing company, owns a 51.35 per cent stake in Illovo and has now made a 20 rand ($1.2) per share offer to acquire the remaining shares.

The deal, which would be worth over 4 billion rand ($254m), values the company at around $580m.

Illovo said it would “appoint independent advisors to assist in the process going forward.”

The South African company added a note of caution, saying: “Discussions, which are still at an early stage, would, if successfully complete, affect the price of the company’s securities."

“Accordingly, shareholders are advised to exercise caution when dealing in the company’s securities until a further announcement is made. At this stage, there is no certainty that the discussions will result on a transaction.”

Illovo is operational across in a number of African countries including Zambian and South Africa.

Investors reacted positively to the news with shares in Illovo jumping nearly 10 per cent.

In its trading update to the market last month, ABF, which also runs a can processing operation in China said Illovo’s production levels were expected to be down.

It said: “Illovo’s  total production is expected to be slightly lower than last year with volumes affected by exceptional and sustained drought in South Africa, and hydro-electric power outages restricting cane irrigation in Zambia.”

Illovo is facing pressure on sugar prices as well as production problems in Africa due to a drought.