8th Apr 2016 06:31
LONDON (Alliance News) - Associated British Foods PLC on Friday said it is to acquire the 48.65% of Johannesburg-listed sugar producer Illovo Sugar Ltd it didn't already own for ZAR5.6 billion, or ZAR25 per share, equivalent to about GBP262.0 million, in cash, after reaching an agreement with the company's board.
Associated British Foods, which acquired its majority stake in Illovo in 2006, said Illovo is the largest sugar producer in Africa and one of the lowest cost producers in the world. The FTSE 100 food, ingredients and retail company said it expects the acquisition to boost its earnings immediately.
The deal comes two months after Associated British Foods said it intended to make an offer for the minority shares at ZAR20 per share.
"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," Associated British Foods said in a statement.
The price to be paid for the 48.65% stake is "in line with the preliminary fair and reasonable opinion" given by Rand Merchant Bank, a division of FirstRand Bank Ltd, the independent valuation expert retained by Illovo.
The acquisition requires approval from minority shareholders of Illovo at a vote scheduled to take place in May. Illovo shareholders representing a majority of the Illovo shares not owned by the London-listed company have undertaken to vote, or recommend their clients to vote, in favour of the deal, according to Associated British Foods.
Illovo directors who own shares in Illovo have agreed, in principle, to vote in favour of the proposed transaction, Associated British Foods said.
By Samuel Agini; [email protected]; @samuelagini
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