ABF Acquires Full Ownership of Illova Sugar
Associated British Foods, the UK-based diversified international food, ingredients and retail group, has agreed to acquire the 48.65% interest in Illovo Sugar that it does not already own for ZAR5.6 billion (£262 million) in cash. ABF acquired its majority shareholding in Illovo in 2006.
Illovo is listed on the Johannesburg Stock Exchange and is the largest sugar producer in Africa. It is one of the world’s lowest cost producers, with leading market positions in South Africa, Malawi, Zambia and Swaziland and a strong presence in Mozambique and Tanzania. For the year ending 31 March 2015, Illovo generated an operating profit of ZAR1.655 billion (£77 million) on sales of ZAR13.3 billion (£619 million).
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, an operating division of ABF, 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. The transaction is expected to be immediately earnings accretive for ABF.
