ILLOVO - PROPOSED ACQUISITION OF MONITOR SUGAR

ILLOVO SUGAR LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 02/00622/06)
("ILLOVO" OR "THE COMPANY")
PROPOSED ACQUISITION OF MONITOR SUGAR
1.  INTRODUCTION

ING BARINGS IS AUTHORISED TO ANNOUNCE THAT AN AGREEMENT IN PRINCIPLE HAS BEEN
ENTERED INTO WITH CG SMITH FOODS LIMITED ("CG SMITH FOODS") PURSUANT TO WHICH
ILLOVO WILL ACQUIRE MONITOR SUGAR COMPANY ("MONITOR SUGAR") THROUGH THE
ACQUISITION OF ITS HOLDING COMPANY FROM CG SMITH FOODS ("THE ACQUISITION").
THE CONSIDERATION PAYABLE BY ILLOVO FOR MONITOR SUGAR IS R350 MILLION. THIS
WILL BE SETTLED BY THE PAYMENT OF R122 MILLION IN CASH AND BY THE ISSUE OF 38
319 328 NEW ILLOVO SHARES TO CG SMITH FOODS AT A PRICE OF R5,95 PER SHARE. THE
EFFECTIVE DATE OF THE ACQUISITION WILL BE 1 JULY 1999.

CG SMITH FOODS HAS A 50,8% SHAREHOLDING IN ILLOVO AND FOLLOWING THE ISSUE OF
THE NEW ILLOVO SHARES, THIS WILL INCREASE TO 56,6%. IN ACCORDANCE WITH THE
LISTING REQUIREMENTS OF THE JOHANNESBURG STOCK EXCHANGE ("THE JSE"), THE JSE
COMMITTEE HAS DEEMED THE ACQUISITION TO BE A RELATED PARTY TRANSACTION
REQUIRING THE APPROVAL, BY ORDINARY RESOLUTION, OF ILLOVO SHAREHOLDERS OTHER
THAN CG SMITH FOODS, IN GENERAL MEETING. IN ADDITION, THE ACQUISITION IS
SUBJECT TO THE CONSENT OF THE SOUTH AFRICAN RESERVE BANK AND A NUMBER OF OTHER
REGULATORY APPROVALS.
2.  INFORMATION ON MONITOR SUGAR

MONITOR SUGAR IS BASED IN THE US STATE OF MICHIGAN AND PRODUCES APPROXIMATELY
150 000 TONS OF SUGAR PER ANNUM FROM SUGAR BEET, WHICH IT SELLS UNDER ITS
POPULAR BIG CHIEF BRAND TO CUSTOMERS THROUGHOUT THE MID WEST REGION OF THE
UNITED STATES. IN ADDITION, IT MARKETS ITS CO-PRODUCTS, MOLASSES AND PULP, TO
CUSTOMERS IN THE US, CANADA AND EUROPE. FOR THE YEAR ENDED 30 SEPTEMBER 1998,
MONITOR SUGAR RECORDED TURNOVER OF US$92 MILLION AND NET INCOME OF US$6,5
MILLION. THE NET ASSETS REQUIRED AMOUNT TO US$73 MILLION.
3.  INFORMATION ON ILLOVO

ILLOVO IS AFRICA'S LEADING SUGAR PRODUCER AND A SIGNIFICANT MANUFACTURER OF
DOWNSTREAM PRODUCTS WITH AGRICULTURAL, MANUFACTURING AND OTHER INTERESTS
EXTENDING OVER SIX SOUTHERN AFRICAN COUNTRIES: SOUTH AFRICA, MALAWI, SWAZILAND,
MAURITIUS, TANZANIA AND MOZAMBIQUE. THE COMPANY'S PRINCIPAL ACTIVITIES COVER
THE ANNUAL PRODUCTION OF APPROXIMATELY 4,6 MILLION TONS OF CANE AND 1,8 MILLION
TONS OF RAW AND REFINED SUGAR, AS WELL AS DOWNSTREAM PRODUCTION OF SYRUP,
FURFURAL, FURFURYL ALCOHOL, DIACETYL, ETHYL ALCOHOL, LACTULOSE, DEXTRAN AND
ELECTRICITY.
4.  BACKGROUND TO AND REASONS FOR THE ACQUISITION

THE ACQUISITION FURTHERS ILLOVO'S STRATEGIC OBJECTIVE OF BECOMING A MAJOR
GLOBAL LOW COST PRODUCER OF SUGAR AND WILL INCREASE THE PROPORTION OF ILLOVO'S
SALES GENERATED IN HARD CURRENCY TO AROUND 47%. A RECENT SURVEY BY A LEADING
INDEPENDENT SUGAR CONSULTANT SHOWED THAT UNITED STATES BEET PRODUCERS ARE THE
LOWEST COST BEET SUGAR PRODUCERS IN THE WORLD. MONITOR SUGAR'S PLANT HAS BEEN
WELL MAINTAINED AND CONTINUOUSLY UPGRADED OVER THE PAST TEN YEARS. ILLOVO HAS
BEEN REPRESENTED ON THE MONITOR SUGAR BOARD DURING THIS PERIOD AND THE BUSINESS
HAS A WELL RESPECTED MANAGEMENT TEAM.

A US$40 MILLION CAPITAL PROJECT IS CURRENTLY UNDERWAY WHICH WILL SIGNIFICANTLY
IMPROVE EXTRACTION RATES THROUGH THE DE-SUGARISATION OF MOLASSES. THE START-UP
OF THE DE-SUGARISATION PLANT IS EXPECTED TO OCCUR LATER THIS YEAR AND WILL
REACH OPTIMUM EFFICIENCY BY 2001. THIS PROJECT WILL PROVIDE SIGNIFICANT
INCREMENTAL GROWTH AND WILL REDUCE THE CYCLICAL IMPACT OF ADVERSE WEATHER
CONDITIONS. IN ADDITION, TECHNICAL AND OTHER BENEFITS ARE EXPECTED TO FLOW FROM
THE ACQUISITION, AND MONITOR SUGAR PROVIDES AN IDEAL BASE FOR FURTHER
INTERNATIONAL EXPANSION IN DUE COURSE.
5.  FINANCIAL EFFECTS OF THE ACQUISITION

THE FINANCIAL EFFECTS OF THE ACQUISITION OF ILLOVO'S HEADLINE EARNINGS PER
SHARE, NET PROFIT PER SHARE AND TANGIBLE NET ASSET VALUE PER SHARE ARE SET OUT
IN THE TABLE BELOW ON THE BASIS THAT THE ACQUISITION WAS EFFECTIVE FROM 1
OCTOBER 1997.

                                    BEFORE    AFTER     INCREASE/

                                    (CENTS)   (CENTS)   (DECREASE)

HEADLINE EARNINGS PER SHARE         100,4(1)  95,5(3)   (4,9%)

NET PROFIT PER SHARE                108,3(1)  102,5(3)  (5,4%)

TANGIBLE NET ASSET VALUE PER SHARE  275,6(2)  336,6(4)  22,1%
NOTES:

(1) AS REPORTED BY ILLOVO FOR THE YEAR ENDED 30 SEPTEMBER 1998.
(2) AS REPORTED BY ILLOVO AS AT 30 SEPTEMBER 1998.

(3) BASED ON THE AUDITED INCOME STATEMENT OF ILLOVO AND MONITOR SUGAR FOR THE
YEAR ENDED 30 SEPTEMBER 1998 AND AFTER ACCOUNTING FOR THE NEW ILLOVO SHARES TO
BE ISSUED PURSUANT TO THE ACQUISITION AND FOR INTEREST ON THE CASH ELEMENT OF
THE CONSIDERATION, CALCULATED AT 16% AND TAXED AT 35%.

(4) BASED ON THE AUDITED BALANCE SHEET OF ILLOVO AND MONITOR SUGAR AS AT 30
SEPTEMBER 1998 AND AFTER ACCOUNTING FOR THE NEW ILLOVO SHARES TO BE ISSUED
PURSUANT TO THE ACQUISITION.

ILLOVO EXPECTS THE ACQUISITION TO BE MARGINALLY DILUTIVE ON THE COMPANY'S
HEADLINE EARNINGS PER SHARE FOR THE YEAR TO 30 SEPTEMBER 1999 AND TO ENHANCE
HEADLINE EARNING PER SHARE THEREAFTER.
6. DOCUMENTATION

A CIRCULAR GIVING NOTICE OF THE ILLOVO GENERAL MEETING AND CONTAINING FULL
DETAILS OF THE ACQUISITION WILL BE DISPATCHED TO SHAREHOLDERS WITHIN 28 DAYS OF
THE DATE HEREOF.
DURBAN
24 MARCH 1999
FINANCIAL ADVISER
ING BARINGS
SPONSORING BROKER
ING BARINGS SOUTHERN AFRICA LIMITED
(REGISTRATION NUMBER 94/04352/07)
(MEMBER OF THE JOHANNESBURG STOCK EXCHANGE)
LEGAL ADVISER
G&B
GARLICKE & BOUSFIELD INC ATTORNEYS