PepsiCo, Inc., said it has just acquired South Africa’s Pioneer Foods Group Ltd.
The acquisition which was valued for $1.7 billion represents a 56% premium to the 30-day volume-weighted average price prior to the cautionary announcement on July 15, 2019.
Pioneer Foods produces cereals, juices, and other African nutritional food staples, including well-known, scaled brands like Weet-Bix, Liqui-Fruit, Ceres, Sasko, Safari, Spekko, and White Star.
The soft drinks and beverage giant said the acquisition in gaining a solid beachhead for expansion into Sub-Saharan Africa by boosting the company’s manufacturing and go-to-market capabilities, enabling scale and distribution.
The acquisition will also bring about a renewed competitive pressure between PepsiCo and The Coca-Cola Company. It would be recalled that the latter had acquired over 30% in Nigeria’s CHI Limited. CHI is the largest producer of juices, milk and flavoured dairy products in West Africa.
“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,” said PepsiCo Chairman and CEO, Ramon Laguarta. “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. Our businesses are highly complementary, and we look forward to working with the Pioneer Foods team to successfully build and implement a shared vision in the region.”
“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 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.”
PepsoCo said it will create a new operating sector for Sub-Saharan Africa. PepsiCo SSA will be led by Eugene Willemsen, who most recently served as Executive Vice President of Global Categories & Franchise Management. Willemsen, who has been with PepsiCo for nearly 25 years, has extensive experience in growth markets, having previously led the company’s businesses in Turkey and South East Europe. Pepsico said the structure will not impact PepsiCo’s reporting structure, and PepsiCo SSA will remain part of Europe Sub-Saharan Africa from a financial reporting perspective.
UBS Investment Bank, J.P. Morgan, Centerview, Bowmans, PSG Capital Webber Wentzel advised the transaction on both sides.
