Beverage and snacks giant PepsiCo has signed a deal to acquire South Africa’s Pioneer Foods Group, for US$1.7 billion.
Pioneer Foods portfolio includes cereals, juices, and healthy food products such as Weet-Bix, Liqui-Fruit, Ceres, Sasko, Safari, Spekko and White Star.
PepsiCo said the acquisition will provide more local employment, talent development and will benefit local suppliers.
The FMCG giant also plans to expand its Sustainable Farming Program in the country which will allow it to work with local farmers in Pioneer Foods’ communities — including women and rural smallholders.
“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.”
PepsiCo said it is aware of the significance of the economic transformation through Broad-Based Black Economic Empowerment (“BEE”) program and will help support Pioneer Foods’ BEE program.
“Today’s announcement marks a very exciting milestone for Pioneer Foods and our people, and highlights the strength of what we have created. 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,” said Tertius Carstens, CEO of Pioneer Foods.
The company is also creating a new operating sector for Sub-Saharan Africa, PepsiCo SSA, which will be led by Eugene Willemsen, who was previously the executive vice president of Global Categories & Franchise Management. PepsiCo SSA will remain part of Europe Sub-Saharan Africa from a financial reporting perspective.
The deal will be funded through a combination of debt and cash and is expected to close by Q1 of 2020 subject to a Pioneer Foods shareholder vote and regulatory approvals.