PepsiCo to acquire South Africa food producer Pioneer Foods for $1.7bn

Pepsico acquisition of Pioneer Foods: US drinks and snacks group PepsiCo has signed an agreement to buy South African food producer Pioneer Foods for $1.7 billion in cash to expand its presence in the African continent.

PepsiCo to expand in Africa through Pioneer Foods

Pioneer Foods, which is one of the largest producers and distributors of a range of branded food and beverage products in South Africa, generated revenue of approximately $1.5 billion in 2018.

As per the latest food acquisition news, the price offered to the South African packaged goods company by Pepsico is for R110.00 ($7.89) per share in cash, which represents a 56% premium to the 30-day volume-weighted average price prior to 15 July 2019, which will be funded through a combination of debt and cash.

Pepsico acquisition of Pioneer Foods is expected to create a top food and beverage company in Africa based in South Africa.

Pepsico acquisition of Pioneer Foods

Pepsico acquisition of Pioneer Foods – PepsiCo to expand in Africa through Pioneer Foods. Photo courtesy of PepsiCo.

Tertius Carstens – CEO of Pioneer Foods, commenting on Pepsico acquisition of Pioneer Foods, said: “Today’s announcement marks a very exciting milestone for Pioneer Foods and our people, and highlights the strength of what we have created.

“As part of PepsiCo, we will have greater scale to expand our leading brands, greater capital to invest in local agriculture and people, greater access to leading global capabilities and a partner committed to taking our company to even greater heights.”

PepsiCo said that Pioneer Foods product portfolio complements its current lineup in cereals, juices, and other African nutritional food staples through brands such as Weet-Bix, Liqui-Fruit, White Star, Ceres, Sasko, Safari, and Spekko. On the other hand, the food and beverage portfolio of PepsiCo includes Frito-Lay, Gatorade, Pepsi-Cola, Tropicana, and Quaker.

Its acquisition of the South African food producer will help in expanding into Sub-Saharan Africa by increasing its manufacturing and distribution facilities.

Commenting on Pepsico acquisition of Pioneer Foods, Ramon Laguarta – PepsiCo Chairman and CEO said: “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 Purpose, we are absolutely thrilled to join forces with Pioneer Foods, one of South Africa’s leading food and beverage companies.

“Pioneer Foods represents a differentiated opportunity for PepsiCo and allows us to immediately scale our business in Africa. Pioneer Foods forms an important part of our strategy to not only expand in South Africa, but further into sub-Saharan Africa as well.”

As part of the acquisition, PepsiCo will establish PepsiCo SSA, a new operating sector for Sub-Saharan Africa (SSA).

Subject to certain regulatory approvals, and other customary conditions, Pepsico acquisition of Pioneer Foods is expected to be completed by the first quarter of 2020.

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