ABF acquired the majority shareholding in Illovo in 2006 and has now purchased the remaining 48.65%. The deal is subject to shareholder approval, which is expected in May.
Illovo is listed on the Johannesburg Stock Exchange and is the largest sugar producer in Africa. It has leading market positions in South Africa, Malawi, Zambia and Swaziland and a strong presence in Mozambique and Tanzania.
The agreed offer price per share is 25 South African Rand (Ra25) representing a total consideration of Ra5.6bn (£262M) to be settled in cash.
ABF said the agreed offer price is in line with the “preliminary fair and reasonable opinion” provided by the independent valuation expert retained by the Board of Illovo, Rand Merchant Bank, a division of FirstRand Bank.
In a statement ABF said: “Africa is a growth market for sugar, driven by increasing populations and rising incomes. Illovo is well positioned to capitalise on this growth although high global sugar stocks, low world sugar prices and forthcoming changes to the EU sugar regime have created a challenging trading environment.
“AB Sugar has a strong track record of commercial development and delivering performance improvement programmes and believes that full ownership will accelerate Illovo’s progress in these areas.”
ABF is an international food, ingredients and retail group, with sales of £12.8bn and 124,000 employees in 48 countries. It has significant businesses in Europe, southern Africa, the Americas, China and Australia. It operates in five business segments: sugar, agriculture, retail, grocery and ingredients.
For the year ending March 31 2015, Illovo generated an operating profit of Ra1,655M (£77M) on sales of Ra13.3bn (£619m).
ABF – at a glance
Jan 2016: Allied Bakeries managed to increase volumes but experienced ‘pricing challenges’, claimed owner ABF in a trading update
Sept 2015: ABF revealed that adjusted operating profit would fall for 52 weeks to September 12, due to significant weakening of the euro
August 2015: Allied Bakeries to cut 23 jobs in a streamlining exercise
June 2015: Animal feed firm AB Agri Limited – a subsidiary of ABF Foods – was fined £10,000 after two workers were seriously injured by a reversing good vehicle
February 2015: Low prices and weakening Euro were responsible for a £98M write down in joint venture bioethanol business, Vivergo Fuels, ABF said