Diversified international food, ingredients and retail group Associated British Foods (ABF) has made a firm offer to acquire all the shares in JSE-listed sugar producer Illovo Sugar it did not already own through its subsidiary ABF Overseas.
A transaction implementation agreement inked on Thursday would see the 51.35% shareholder, with some 236-million shares, buy the remaining shares for R25 apiece by way of a scheme of arrangement.
ABF, which acquired its majority shareholding in Illovo in 2006, would delist the South African sugar producer from the Johannesburg bourse and absorb the firm as a subsidiary.
The group, which would fund the offer through its own cash resources and existing facilities, believed full ownership would accelerate and build on Illovo’s strong record of 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 European Union sugar regime have created a challenging trading environment,” the parties said in a joint statement on Friday.
The transaction remained subject to the fulfilment or waiver of several conditions, including all the requisite approvals and the independent board’s green light, by July 31.
“ABF has received nonbinding letters of support from each of the executive directors of Illovo to support the proposed transaction, vote in favour of the transaction resolutions and accept the general offer [that could be made should the scheme fail],” the companies said.
Illovo would not declare or pay any distribution until the proposed transaction was implemented or failed.
Shareholder would vote on the proposed deal at a meeting to be convened on or around May 25.