PepsiCo offers to acquire South Africa’s Pioneer Foods for US$1.7bn

SOUTH AFRICA – PepsiCo has announced that it has entered into an agreement to acquire all the outstanding shares of South African food and beverage company Pioneer Foods Group for approximately US$1.7 billion.

The deal, which will be PepsiCo’s biggest outside of the US market to date, forms part of the New York-based food and beverages giant plan to expand into the African market.

“Acquiring Pioneer Foods will increase PepsiCo’s presence in a country and region of high growth potential … Pioneer Foods forms an important part of PepsiCo’s strategy to expand not only in SA but in sub-Saharan Africa as well.”

The deal “will contribute meaningfully to the growth of the South African economy under its newly elected leadership” and could spur more foreign direct investment, PepsiCo said.

Pioneer Foods has a rich product portfolio which includes brands like Weet-Bix, Liqui-Fruit, Ceres, Sasko, Safari, Spekko, and White Star and complements PepsiCo’s current lineup as it marks strong positions in cereals, juices, and other African nutritional food staples.

Pioneer said it will gain access “to leading research and development and brand expertise, along with global scale and distribution”.

This transaction creates a leading food and beverage company in Africa, led from South Africa, with a commitment to supporting sustainability and local suppliers and will see PepsiCo create a new operating sector for Sub-Saharan Africa, named PepsiCo SSA.

Food Bev reports that the sector will be led by Eugene Willemsen, who most recently served as executive vice president of global categories and franchise management.

However, this new structure is expected to not impact PepsiCo’s reporting structure, and PepsiCo SSA will remain part of Europe Sub-Saharan Africa (ESSA) from a financial reporting perspective.

PepsiCo will offer Pioneer’s owners, including Zeder Investments, at least R110 (US$7.91) a share, Pioneer said. The transaction is expected to close by Quarter one of the calendar year 2020.

According to a Business Day report, an independent board at Pioneer recommended that investors accept the offer, which already had the support of 52.9% of shareholders, including Zeder.

The acquisition will be funded through a combination of debt and cash, and is subject to a Pioneer Foods shareholder vote as well as certain regulatory approvals and other customary conditions.

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