A South African investor group that recently rescued the debt-laden agricultural producer Tongaat Hulett is planning a takeover of rival Illovo Sugar, according to sources with direct knowledge of the matter. The move would consolidate control of the continent's sugar, ethanol, and bioenergy markets under a single African-owned giant.
The effort has already reached the executive suite of London-based Associated British Foods, the parent company of Illovo. Representatives from Vision Sugar, led by South African billionaire Robert Gumede and Zimbabwean dealmaker Rute Moyo, have initiated contact with ABF CEO George Weston about a deal, one person said. Corporate finance advisory sources estimate that Illovo Sugar holds an enterprise value of between $800 million and $1.1 billion.
The transaction, if it comes to pass, spans Illovo's vast network of sugar estates across South Africa, Zambia, Malawi, Eswatini, Tanzania, and Mozambique, setting up one of the largest agricultural buyouts on the continent in more than a decade.
ABF declined to comment while spokespeople for Illovo did not respond to requests for comment.
A tie-up between Tongaat and Illovo across southern Africa would establish a near-regional monopoly. In South Africa, the combined entity would control more than half of the national sugar milling capacity, leaving Remgro-backed RCL Foods as its only major domestic competitor and likely raising alarm with competition regulators. Beyond South Africa, a merged footprint would grant Vision virtual market exclusivity over primary sugar production across East and South Africa.
Vision's bid for Illovo will also be seen as an energy play. Gumede plans to power and supply regional markets with electricity using both Illovo and Tongaat refineries to produce bio-ethanol and converting leftover sugarcane fiber.
For the $20 billion-dollar parent company an outright sale would mark a complete exit from African sugar, freeing up capital to refocus on its core European foods divisions and flagship retail engine, Primark.
The businessman who led a group of investors that pulled Tongaat Hulett back from the brink of liquidation plans to remake southern Africa sugar giant.