Associated British Foods Plc has offered to buy South Africa’s Illovo Sugar Ltd. at 11.5 billion rand ($759 million) as it seeks to expand its sugar business.
AB Foods, which already owns 51 percent of Illovo, offered 25 rand per share for the portion it doesn’t already own, a statement on Friday said.
“…shareholders of Illovo are advised that on 7 April 2016, Illovo entered into a transaction implementation agreement with ABF, in terms of which ABF will make an offer to acquire all of the issued shares in Illovo (other than the 236 569 232 Illovo shares already owned by AOL),” the statement read.
The U.K. company’s subsidiary AB Sugar serves the international markets for sugar and sugar derived co-products, with operations in the United Kingdom, Spain, southern Africa and China and an annual processing capacity of some five million tonnes of sugar and 600 million litres of ethanol. In a bid to increase this capacity, ABF is buying over Ilovo Sugar following a 2006 majority shareholding acquisition. It had in February offered 20 rand a share in February but increased its offer in the new TIA announced by the companies.
“Africa is a growth market for sugar, driven by increasing populations and rising incomes,” a joint statement by the company said. “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.”
With a strong track record of commercial development and delivering performance improvement programmes, AB Sugar believes that full ownership of Illovo will accelerate the South African company’s progress in these areas.