PepsiCo Targets African Growth With Pioneer Foods Acquisition

The South African company posted revenues of nearly $1.5B last year.

Pioneer Pepsi

PepsiCo, Inc. has entered into an agreement to acquire all the outstanding shares of Pioneer Foods Group Ltd. for approximately $1.7 billion, which represents a 56 percent premium to the 30-day volume weighted average price.

Pioneer Foods is a South African company featuring a product portfolio that could complement PepsiCo with strong regional positions in cereals, juices, and other African nutritional food staples, including brands like Weet-Bix, Liqui-Fruit, Ceres, Sasko, Safari, Spekko and White Star. 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. 

"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 Purposewe are absolutely thrilled to join forces with Pioneer Foods, one of South Africa's leading food and beverage companies," said PepsiCo Chairman and CEO, Ramon Laguarta. 

It will also enable PepsiCo to expand its Sustainable Farming Program in Africa and work with local farmers in Pioneer Foods' communities—including women and rural smallholders—to help boost yields, improve livelihoods, and preserve precious natural resources. "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. 

As part of this transaction and PepsiCo's goal to become faster and more locally focused, the company will create a new operating sector for Sub-Saharan Africa. The acquisition will be funded through a combination of debt and cash, and has been unanimously approved by the Boards of Directors of both companies. 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.  

Pioneer Foods posted revenue of $1.45 billion in 2018.

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