February 10, 2016

South Africa-based Illovo Sugar announced it is engaged in talks with its largest shareholder, Associated British Foods (ABF) regarding that company’s intent to acquire the rest of the company.

ADF, which holds a 51.35% stake in Illovo, made it known that it intends to advance an offer of 20 rand per share for all remaining unowned shares in the company, translating to a deal worth approximately 4.1 million rand, or US$254 million, reports Reuters.

Illovo, which operates across a range of African countries, and is the continent’s largest sugar producer, has been working to cut costs in the face of low sugar prices, infrastructure-related challenges, and ongoing drought in its home market of South Africa.

The company told Food Ingredients First, “ “Illovo’s  total production is expected to be slightly lower than last year with volumes affected by exceptional and sustained drought in South Africa, and hydro-electric power outages restricting cane irrigation in Zambia.”

Upon news of the negotiations, Illovo’s shares hit their highest value in 10 months, climbing 9.42% to 20.10 rand, however the company remains cautious, stating, “Discussions, which are still at an early stage, would, if successfully completed, affect the price of the company’s securities…. At this stage, there is no certainty that the discussions will result in a transaction,” reports Food Ingredients First.