A joint announcement by the two companies said that the primary rationale for the proposed transaction was that ABF’s full ownership of Illovo would help accelerate the latter company’s progress in commercial development and performance improvement programmes.
“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,” said the statement.
ABF said that the expertise of its subsidiary, AB Sugar, in international markets for sugar and sugar-derived products would be of assistance in developing and growing Illovo.
It will be offering R25 a share, at an approximate total cost of R5,6 billion. Final approval for the purchase offer is still subject to a number of legal and corporate processes, including obtaining support from Illovo’s other shareholders and also the delisting of Illovo shares from the JSE.