By July 19, 2019

Pepsico Enters Africa In New ZAR 24.4 Bn Deal With Pioneer

By July 19, 2019

New York-based food and beverages giant PepsiCo has agreed to buy South Africa’s Pioneer Foods for ZAR 24.4 Bn in a new deal that will see them get a foothold of the African continent.

Eugene Willemsen, who is expected to move to Cape Town to head the operation, said, “This transaction is all about growth. We are looking to expand our footprint.”

The US company in a press statement said that the deal “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.”

PepsiCo offered 110 rands per share for Pioneer, which represents a 56 percent premium on the stock.

In a message addressed to its shareholders, Pioneer said the deal would be “one of PepsiCo’s largest acquisitions outside of the United States, which is a demonstration of PepsiCo’s belief in South Africa’s potential and its long-term commitment to the country.”

Reportedly, the transaction has already been approved by the boards of the two companies.

A joint statement said that Pioneer Foods had “a robust, locally relevant product portfolio” to offer to PepsiCo, which would gain “a solid beachhead for expansion” from the deal.

The purchase will add local brands such as Weet-Bix breakfast cereal and Ceres fruit juice to the PepsiCo roster that includes Frito-Lay, Gatorade, Pepsi-Cola, and Tropicana.

Pioneer Foods exports to 80 countries in the continent and other parts of the world. It has joint ventures in Namibia, Botswana, Kenya, and Nigeria. It registered 20.2 Bn rand in sales in 2018.

Pioneer’s profitability has been struggling as South Africa has had a weak consumer market. Wilson however maintained that PepsiCo was “very positive” about the country’s prospects.

Featured Image Courtesy: B&T

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