Associated British Foods (ABF) has agreed to buy the largest cane sugar producer in Africa in a bid to take advantage of changes to the EU sugar regime.

It made a recommended £317m offer for 51% of the fully diluted ordinary share capital of Illovo Sugar last week, subject to regulatory and shareholder approvals.

The changes to the EU sugar regime will provide free access for exports to the EU from Least Developed Countries (LDCs) from 2009. The LDC classification includes Malawi, Zambia, Tanzania and Mozambique. Illavo Sugar is the leading producer in South Africa, Malawi, Zambia and Swaziland and has a strong and growing presence in Tanzania and Mozambique.

ABF said the acquisition of Illovo Sugar will support its stated plans for capacity expansion and development in its African markets.

And British Sugar will provide an efficient route to market for these exports from Illovo, according to ABF.

In the year ended 31 March 2006 Illovo Sugar’s revenue was £458m and pre-tax profit was £54m. It produced 1.9 million tonnes of sugar in 2005/6 and has identified development programmes to expand this capacity substantially.

George Weston, Chief Executive of ABF, said: “The combination of British Sugar and Illovo will create a powerful partnership in Africa and Europe.”