Associated British Foods announced on Friday morning that it had reached agreement with the board of Illovo Sugar to acquire the 48.65% interest in Illovo that it did not already own.

The FTSE 100 firm acquired a majority shareholding in Illovo in 2006, and flagged the acquisition of the remainder on 8 February and 18 March this year.

ABF’s board said the agreed offer price per share was ZAR 25, representing a total consideration of ZAR 5.6bn (£262m) to be settled in cash.

Illovo remains the largest sugar producer in Africa, and is listed on the Johannesburg Stock Exchange. It has leading market positions in South Africa, Malawi, Zambia and Swaziland and a strong presence in Mozambique and Tanzania.

“Africa is a growth market for sugar, driven by increasing populations and rising incomes,” ABF’s board said in a statement.

“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,” it added.

The transaction was expected to be implemented by way of a scheme of arrangement, which would be subject to Illovo minority shareholder approval at an extraordinary meeting in May.

ABF said Illovo shareholders representing a majority of minority shares had provided undertakings to vote, or to recommend to their clients to vote, and Illovo directors who own shares had agreed in principle to vote in favour of the proposal.

Source: London South East