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PepsiCo Targets African Growth in $1.7 Billion Deal

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PepsiCo Targets African Growth in $1.7 Billion Deal

PepsiCo Targets African Growth in $1.7 Billion Deal
July 22
12:03 2019

PepsiCo has agreed to acquire all the outstanding shares of Pioneer Foods Group of South Africa for approximately US$1.7 billion. Pioneer Foods has a robust, locally relevant product portfolio that complements PepsiCo’s current line-up, with strong positions in 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 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 Purpose, we are absolutely thrilled to join forces with Pioneer Foods, one of South Africa’s leading food and beverage companies,” says PepsiCo chairman and chief executive, 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.”

Tertius Carstens, chief executive of Pioneer Foods, and Eugene Willemsen, chief executive of PepsiCo Sub-Saharan Africa.

This transaction creates a leading food and beverage company in Africa led from South Africa. It will enable PepsiCo to expand its Sustainable Farming Program in Africa and work with local farmers in Pioneer Foods’ communities to help boost yields, improve livelihoods, and preserve precious natural resources. PepsiCo is keenly aware of the importance of economic transformation through Broad-Based Black Economic Empowerment (BEE) and intends to support Pioneer Foods’ BEE program.

Tertius Carstens, chief executive of Pioneer Foods, says: “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.”

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 (SSA). 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 calendar year 2020.

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