HomePoliticsSA firm to buy stake in Hippo

SA firm to buy stake in Hippo

SOUTH African sugar and aluminium group Tongaat-Hulett said yesterday its subsidiary Triangle Sugar Corporation would buy Anglo American’s 50,35% stake in Zimbabwean sugar firm Hippo Valley Estates for US$36 million.


Valley owns and operates the second largest sugar producing and refining business in Zimbabwe and is listed on the Zimbabwe Stock Exchange.

The acquisition would almost double Tongaat-Hulett’s production in Zimbabwe and boost its capacity in southern Africa by a further 300 000 tonnes to 1,5 million tonnes a year, the company said in a statement.

Anglo American owns the holding in Hippo Valley through its Anglo American Corporation Zimbabwe (AmZim), which will, through the deal with Tongaat Hulett, dispose of all its Zimbabwean sugar assets.

Tongaat-Hulett said in a note to the JSE that Triangle will issue shares representing a 25,3% interest to AmZim.

Subsequently, Tongaat-Hulett will, through a wholly-owned foreign subsidiary Bassieres Holdings, acquire these shares for a purchase price of $36-million.

This will be funded from Tongaat-Hulett’s existing offshore cash resources.

“This acquisition provides the opportunity to extract the synergistic benefits available from the operations of these two large world-class sugar enterprises with the two sugar factories being only 30 km apart and the cane estates practically side-by-side,” Tongaat-Hulett chief executive Peter Staude said.

“World sugar markets are presenting exciting growth opportunities for Tongaat-Hulett. The previously announced EU sugar reforms, in particular the world-trade organisation ruling with regard to EU exports that will result in them reducing from five million to seven million tonnes, to a maximum of 1,4 million tonnes from next year, the increasing use of sugar cane for ethanol production and the fact that the world sugar consumption growth rate is 2% per annum are all contributing factors” Staude said.

Anglo American’s disposal of the stake in Hippo Valley follows sales by the group of ferrochrome and nickel assets in Zimbabwe — Bindura Nickel in 2003 and Zimbabwe Alloys in 2005.

It also owns just over 50% of Tongaat-Hulett, but has indicated that it plans to sell the stake.

Further, because the transaction is a reorganisation of Anglo American’s sugar interests in Zimbabwe, the acquisition will not trigger an offer to Hippo Valley’s minorities, Tongaat-Hulett said.

The deal comes just ahead of Tongaat Hulett’s unbundling in 2007, when Pietermaritzburg-based Hulett Aluminium (Hulamin), in which it holds a 50% stake, will be unbundled and listed separately on the Johannesburg bourse. — Engineering News (SA).

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