PepsiCo plans to acquire South Africa's Pioneer Foods

The acquisition will help PepsiCo gain a solid beachhead for expansion into sub-Saharan Africa by boosting the company's manufacturing and go-to-market capabilities, enabling scale and distribution.

USA -based beverage and snack maker PepsiCo PEP.O is planning to acquire South Africa's Pioneer Food Group PFGJ.J for around $1.7 billion, the two companies said on Friday, as it targets expansion in Africa.

PepsiCo is pressing ahead into the African food market, agreeing to acquire Pioneer Foods Group of South Africa in a bid to expand its global growth.

"As we look to accelerate our growth in key markets around the world and achieve our vision to Be the Global Leader in Convenient Foods and Beverages by Winning with objective, we are absolutely thrilled to join forces with Pioneer Foods, one of South Africa's leading food and beverage companies", said Laguarta.

The transaction is subject to a Pioneer Foods shareholder vote, certain regulatory approvals, and other customary conditions, and closing is expected by the first quarter of 2020. PepsiCo is keenly aware of the importance of economic transformation through Broad-Based Black Economic Empowerment ("BEE") and intends to support Pioneer Foods' BEE program.

In a post published to the JSE's SENS, Pioneer laid out the "firm intention" from PepsiCo to acquire the stake, which is valued at approximately $1.7 billion (R23.5 billion).

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"Today's announcement marks a very exciting milestone for Pioneer Foods and our people, and highlights the strength of what we have created", said Tertius Carstens, CEO of Pioneer Foods.

The deal is the first major global purchase under new Chief Executive Officer Ramon Laguarta, who took the helm in October, and builds on a US$3.2 billion buyout of Israel's SodaStream worldwide last August.

It's great to see some investment interest in South African shares.

The transaction is one of PepsiCo's largest acquisitions outside of the United States.

Zeder's share price on the JSE had risen by 23% by 14:40 on Friday.

According to Treurnicht, PepsiCo has a clear strategy of using Pioneer's infrastructure as a base to launch its brands into South Africa and the rest of Africa, allowing PepsiCo to achieve "massive synergies and be able to invest huge amounts" of money in the country.

  • Darren Santiago