Illovo Sugar Ltd. said it received a cash offer from majority owner Associated British Foods Plc for the company’s remaining shares at 20 rand each, valuing the South African producer at 9.2 billion rand ($569 million).
AB Foods, the London-based owner of Kingsmill bread and discount clothing retailer Primark, has a 51 percent stake in Illovo, which it bought in 2006 for 21 rand a share. There’s no certainty the discussions will result in a deal, the Mount Edgecombe, South Africa-based sugar company said in a statement on Monday.
Illovo shares gained 9.4 percent to 20.10 rand as of 4:11 p.m. local time. AB Foods declined 1.1 percent to 3,063 pence in London, extending the decline this calendar year to 8.4 percent.
AB Foods earnings have largely stagnated since 2013, as plummeting profit in the company’s sugar-production business has cancelled out the growth of Primark and a food-making unit. The company said in January that profit in the year through September will show a “modest decline,” as the weakness of emerging market currencies weigh on the business.
AB Foods confirmed the offer in a separate statement.