Acquisition of Illovo minority interest
8 April 2016
Further to the announcements on 8 February and 18 March 2016, Associated British Foods plc (“ABF”), today announces that it has reached agreement with the Board of Illovo Sugar Limited (“Illovo”) to acquire the 48.65% interest in Illovo that it does not already own. The agreed offer price per share is rand 25 representing a total consideration of rand 5.6bn (£262m) to be settled 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.
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 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 agreed offer price is in line with the preliminary fair and reasonable opinion provided by the independent valuation expert retained by the Board of Illovo, Rand Merchant Bank, a division of FirstRand Bank Limited. The transaction is expected to be immediately earnings accretive for ABF.
The transaction is expected to be implemented by way of a scheme of arrangement, which is subject, among other things, to Illovo minority shareholder approval, which will be sought at an extraordinary shareholder meeting of Illovo in May. Illovo shareholders representing a majority of the Illovo shares not owned by ABF have provided undertakings to vote, or to recommend to their clients to vote, in favour of the scheme of arrangement. Furthermore, Illovo directors who own shares in Illovo have agreed, in principle, to vote in favour of the proposed transaction.
For further enquiries please contact:
Associated British Foods
John Bason, Finance Director
Flic Howard-Allen, Head of External Affairs
Tel: 020 7399 6500
Tel: +27 82 45 24 389
UK & other media
Citigate Dewe Rogerson
Chris Barrie, Eleni Menikou
Tel: +44 20 7638 9571
Notes to Editors
ABF is a diversified international food, ingredients and retail group with sales of £12.8bn and 124,000 employees in 48 countries. It has significant businesses in Europe, southern Africa, the Americas, China and Australia. It aims to achieve strong, sustainable leadership positions in markets that offer potential for profitable growth, and deliver quality products and services that are central to people’s lives. The group operates in five business segments: Sugar, Agriculture, Retail, Grocery and Ingredients.
AB Sugar, an operating division of ABF, is an industry leading group in the international markets for sugar and sugar derived co-products. It has operations in the United Kingdom, Spain, southern Africa and China with an annual processing capacity of some 5m tonnes of sugar and 600m litres of ethanol.
Illovo Sugar Limited is Africa’s biggest sugar producer and has extensive agricultural and manufacturing operations in six African countries. The group produces raw and refined sugar for local, regional African and export markets from sugar cane supplied by its own agricultural operations and independent outgrowers who supply cane to Illovo’s factories. High-value products, manufactured downstream of the sugar production process, are sold internationally into niche markets. Installed electricity generating capacity, fuelled by renewable resources, provides 90% of the group’s energy requirements. For the year ending 31 March 2015, Illovo generated an operating profit of rand 1,655m (£77m) on sales of rand 13.3bn (£619m).