PepsiCo plans to acquire South Africa's Pioneer Foods

PepsiCo to buy South Africa's Pioneer Food for $1.7 billion

PepsiCo plans to acquire South Africa's Pioneer Foods

"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 objective, 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.

Global food giant PepsiCo plans to spend around R24 billion to buy South African group Pioneer Foods, the two companies announced on Friday morning.

In addition to expanding PepsiCo's reach, the acquisition gives the company "a portfolio of well-established local brands - including well-known, scaled brands like Weet-Bix, Liqui-Fruit, Ceres, Sasko, Safari, Spekko and White Star - providing [PepsiCo] with a significant runway of locally-relevant products", according to analysis from Wells Fargo.

It added that the acquisition, valued at approximately U.S. $1.7 billion, will be funded through a combination of debt and cash, and "has been unanimously approved by the boards of directors of both companies".

PepsiCo assured that it is aware of the importance of economic transformation through Broad-Based Black Economic Empowerment and will support Pioneer Foods' existing BEE programme.

The deal will see PepsiCo expand its Sustainable Farming Program in Africa through which it will work with local farmers in Pioneer Foods' communities to help boost yields, improve livelihoods, and preserve precious natural resources.

RBC Capital Markets said: "This acquisition is a testament to the fact that new CEO Ramon Laguarta is serious about reinvesting behind the business to drive future growth and is willing to be more active with M&A for the right opportunities".

"It's a vote of confidence in South Africa at a time when we really need it", Pioneer CEO Tertius Carstens told Reuters.

He added that while investors should not necessarily "rush out and buy a whole lot of South African labels", deals like the PepsiCo and Pioneer transaction "make ideal sense".

Pioneer exports to more than 80 countries.

He said that the company was seeking to expand aggressively in sub-Saharan Africa, a region which is expected to double in population to 2.2 billion people by 2050.

The transaction is one of PepsiCo's largest outside of the United States.

Latest News