South African billionaire Robert Gumede targets Illovo months after rescuing rival Tongaat Hulett

Robert Gumede is attempting to buy Illovo Sugar from its British parent, a deal that would place most of southern Africa's sugar production under a single African-owned company months after his investors rescued Illovo's largest regional competitor.

Representatives of Vision Sugar, which Gumede leads with the Zimbabwean dealmaker Rute Moyo, have approached George Weston, chief executive of Associated British Foods, about a transaction, Semafor reported on Monday, citing sources with direct knowledge of the matter.

Corporate finance advisers put Illovo's enterprise value at between $800 million and $1.1 billion. No offer figure has been disclosed.

Associated British Foods declined to comment. Illovo did not respond to requests for comment.

Illovo is the largest sugar producer in Africa, operating estates and mills in South Africa, Zambia, Malawi, Eswatini, Tanzania and Mozambique. A sale would represent one of the largest agricultural buyouts on the continent in more than a decade.

The same investor group brought Tongaat Hulett out of business rescue this year, ending a collapse that had run since 2022 and had at one point been headed toward liquidation. Tongaat and Illovo have been the two dominant sugar businesses in southern Africa for generations, and both were once part of the same corporate lineage before splitting.

Combining them would recreate that concentration under one owner.

In South Africa the merged company would hold more than half of national sugar milling capacity, leaving RCL Foods, backed by Johann Rupert's Remgro, as the only substantial domestic competitor. Across the wider region, Semafor reported, the combination would give Vision near-exclusive control of primary sugar production in East and southern Africa.

That is the sort of position competition regulators exist to examine. South Africa's Competition Commission has taken an increasingly interventionist line on concentration in food production, and a transaction touching six countries would require clearance in most of them. The regulatory review, rather than the price, is likely to determine whether the deal happens.

Sugar as an energy business

Gumede's interest extends beyond the commodity.

He intends to use refineries at both Illovo and Tongaat to produce bio-ethanol and to convert leftover sugarcane fibre into power, supplying electricity into regional markets, according to Semafor.

That approach has a logic South African industry has been slow to adopt. Bagasse, the fibrous residue left after cane is crushed, is a fuel. Brazilian and Indian sugar producers have run co-generation plants off it for decades, selling surplus electricity into national grids and treating sugar and power as a single business.

In a region where South Africa has spent years managing electricity shortages and where Zambia, Malawi and Mozambique face their own supply constraints, a sugar company with generating capacity across six countries becomes an energy company that happens to grow cane.

A British exit

For Associated British Foods, a sale would end its involvement in African sugar entirely.

The group is valued at about $20 billion and has been narrowing its focus toward its European food brands and Primark, the discount clothing chain that has become its principal growth engine. Illovo has been a substantial but geographically distant asset, exposed to currencies, weather and agricultural policy across six developing markets.

Selling it would release capital and remove that exposure from the balance sheet.

Gumede founded the Guma Group, a South African investment holding company with interests spanning information technology, construction, mining, property and agriculture. His entry into sugar came through the Tongaat rescue, in which Vision Group emerged as the buyer of the lender claims and worked with the Industrial Development Corporation to secure the restructuring.

That process was contested. RGS Group Holdings, controlled by Mozambique's Gulamo family, had pursued a rival plan and pushed for Tongaat's liquidation, later applying to set aside the business rescue plan. Judgment on that application was reserved in June.

Semafor reported in March that Gumede intended to remake Tongaat rather than simply stabilise it. The approach to Associated British Foods indicates what that meant.

Neither Vision Sugar nor Gumede has commented publicly on the Illovo approach, and no formal offer has been confirmed.