PepsiCo, an American multinational food and beverage company, has entered into agreement to acquire one of South Africa’s largest makers of branded food and beverage products, Pioneer Foods Group Limited, for $1.7 billion as it seeks to widen presence in Africa.
Given the agreement, the New-York headquartered company would purchase the entire 222 million shares outstanding of Pioneer Foods for 110 rand per share of the South African-based food maker.
Ramon Lagurta, Chairman and Chief Executive Officer of PepsiCo, said the deal is part of the food and beverag giant’s goal to accelerate growth in key markets globally and make the company a “Global” leader in convenient foods and beverage.
“Pioneer Foods represents a differentiated opportunities for PepsiCo and allows us to scale our business in Africa. This forms an important strategy not only to expand in South Africa, but further into Sub-Saharan Africa as well” Lagurta said.
The deal would enable PepsiCo expands its Sustainable Farming Programme in Africa and partner farmers in Pioneer Foods communities including woman and rural smallholders to boost yield and improve livelihood.
Tertius Carstens, Chief Executive Officer of Pioneer Foods, stated that the acquisition marks a milestone for his company, highlighting things achieved by the South African-based food maker.
“As part of PepsiCo, we will have greater scale to expand our leading brands, brings greater capital to invest in local agriculture, and a partner committed to taking our company to greater heights” said Carstens.
As part of this transaction and PepsiCo’s ambition to expand and prioritize local markets, the company would establish an operating sector for the Sub-Saharan African region to be headed by Eugene Willemsen, a former Executive Vice-President of Global Categories and Franchise Management of the group.
The newly-appointed chief of the Sub-Saharan African unit cited expanding economies and Africa’s huge population as growth opportunities PepsiCo seeks to leverage.
The acquisition valued approximately a $1.7 billion, will be funded through a combination of cash and debt, and has been unanimously agreed by the Board of Directors of both companies. The transaction is subject to Pioneer Foods shareholders, regulatory approvals and other customary conditions.
The deal is PepsiCo’s second-largest acquisition outside the United States since 2010. Last year, it acquired Israel-based SodaStream International Limited for $3.2billion
UBS investment, J.P Morgan and Centerview acted as financial advisors to PepsiCo, while Rowmans acted as South African legal counsel to American company. Also, PSG Limited acted as transaction advisor to Pioneer Foods, and Webber Wentzel acted as South African legal counsel to Pioneer Foods.
PepsiCo’s product has a wide range of foods and beverages such as Pepsi-Cola, Tropicana, Catorade, Quicker and Frito-Lay among others, which are consumed in about 200 countries across the globe. The company posted $64.6 billion and $12.5 billion as revenue and profit in 2018.
Israel Odubola
