Sector News

Associated British Foods offers to buy South Africa's Illovo Sugar

February 9, 2016
Food & Drink

(Reuters) – South Africa’s Illovo Sugar said on Monday it has received a non-binding expression of interest from its largest shareholder Associated British Foods in buying the rest of the company.

AB Foods, which holds a 51.35 percent stake in Illovo, intends to make an offer of 20 rand ($1.24) per share for the stake it does not yet hold, Africa’s top sugar producer said in a statement, in a deal worth around 4.1 billion rand ($253 million).

Illovo’s shares were up 9.42 percent at 20.10 rand by 1429 GMT, hitting a 10-month high, while ABF’s shares were down 1.16 percent at 3,061 pence.

Illovo, which has been cutting costs to survive low sugar prices, said ABF plans to make a cash offer to all other shareholders but there was no certainty of a deal.

“Illovo certainly faces challenges, no doubt about that, but these are not new challenges,” said ABF’s finance director John Bason, referring to the drought sweeping across southern Africa. “We take a long term view.”

Shares in the South African company have been depressed by the effects of the severe drought in its home market, Standard Bank Group Securities analyst Sumil Seeraj told Reuters.

“It is opportune for ABF to make the offer now and I think it is a bit low,” said Seeraj.

Seeraj expects some of the sugar producer’s other large shareholders would demand a higher premium as South Africa’s weaker rand could boost Illovo’s earnings this year. ($1 = 16.1979 rand) (Reporting by TJ Strydom and Tiisetso Motsoeneng; Editing by James Macharia, Greg Mahlich)

comments closed

Related News

May 15, 2022

Blurred lines: Vitafoods Europe 2022 review

Food & Drink

Upon FoodBev Media’s return from Vitafoods 2022 – which took place from 10-12 May in Geneva, Switzerland – the team reflects on the event’s aim to bring together international nutraceutical suppliers and experts from across the globe.

May 15, 2022

Crunch time: Mondelēz to dump chewing gum to take bigger bite of chocolate and biscuits markets

Food & Drink

Following a strategic review last year, Mondelēz International is planning to sell its developed chewing gum business, which includes brands Trident and Dentyne. This is in addition to offloading its Halls cough drop brand, as the food giant focuses on generating 90% of revenue in its chocolates and biscuits businesses, including baked snacks.

May 15, 2022

Givaudan strengthens natural preservation portfolio with nitrite alternative for processed meat

Food & Drink

Givaudan has unveiled NaNino+, a patent-pending combination of plant-based ingredients and natural flavorings that can replace nitrite in processed meat. Designed with natural ingredients, it provides a lasting multi-sensorial food experience with a good taste, color and freshness.