The sale is a key step for Lonrho in its drive to sell off unwanted businesses and demerge into two companies, one focused on mining and the other on African trading businesses that include car distribution and property management.
A Lonrho spokesman said yesterday that the deal would cut the company's debt burden by 40 per cent and give Nicholas Morrell, chief executive, valuable breathing space in his demerger programme, which he aims to have under way by the year end.
The spokesman said the deal would also buy time for the company in its attempts to sell its Princess hotels division at as good a price as possible. Lonrho's shares rose 2p to 137.5p following yesterday's announcement.
Mr Morrell himself said: "The disposal of our shareholding in Lonrho Sugar Corporation represents a further important step in realising the inherent value of Lonrho's businesses and reducing group debt while further enhancing the competitive position of LSC through its merger with Illovo."
Illovo said the acquisition of Lonrho's 94.25 per cent stake in Lonrho Sugar, which owns plantations in Swaziland, South Africa, Mauritius and Malawi, would give it access to lower-cost production in sub-Saharan Africa.
"Lonrho Sugar is a globally competitive, low-cost producer with a wide geographic spread of assets," said Don MacLeod, Illovo's managing director.
The company's attractions include cheap labour costs, high yields from its soil quality and irrigation network and a geographic range that spreads weather risks over a large area.
The deal, which ends months of speculation about the future of Lonrho's sugar business, will create Africa's biggest sugar group with interests ranging across southern and east Africa.
Lonrho Sugar is listed on the Johannesburg Stock Exchange and the Swaziland Stock Market. In the year to 31 March 1996, Lonrho Sugar made pre-tax profits of pounds 27.8m on turnover of pounds 99.6m. It had shareholder's funds of pounds 66.2m at the year end.
Minority shareholders will be offered 13.90 rand in cash per share and will also be entitled to the final dividend.
Lonrho Sugar shares, which are only infrequently dealt, last traded at 16.20 rand on Monday. The stock has risen from 12.60 rand since Lonrho Sugar flagged that it was in takeover talks in February.Reuse content