Kingsmill owner Associated British Foods (ABF) is to spend £262m to buy up the remaining stake in Illovo Sugar.

ABF has owned a majority stake in Illovo, the largest sugar producer in Africa, since 2006, but has now decided to take full ownership acquiring the remaining 48.65%.

ABF plans to pay the purchase price entirely in cash.

ABF has owned a majority stake in Illovo, the largest sugar producer in Africa, since 2006, but has now decided to take full ownership. The deal values the company at 11.5bn rand (£537m), a premium of 21.5% to its current Johannesburg Stock exchange market valuation of 9.5bn rand.

ABF said in a statement: “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 [a wholly owned subsidiary of ABF] 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.”

ABF needs the approval of a minority of Illovo shareholders, which it seems likely to get, according to the statement

The acquisition comes at a time when ABF is struggling with slowing sales at its clothing brand Primark, meaning the sugar deal could help to further diversify its earnings.

In February, ABF warned that earnings per share will be lower than expected for its half year results, due out this month.