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PepsiCo targets growth in Africa with Pioneer Foods purchase

PepsiCo pepsico pioneer foods.jpg
Acquisition to help company expand into sub-Saharan Africa by boosting manufacturing and go-to-market capabilities.

PepsiCo Inc. has entered into an agreement to acquire all the outstanding shares of Pioneer Foods Group Ltd., a South African packaged goods company, for approximately $1.7 billion.

Pioneer Foods has a robust, locally relevant product portfolio that complements PepsiCo's current lineup, 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.

PepsiCo said the acquisition will also help it 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.

Finally, the transaction brings together two like-minded companies, with both Pioneer Foods and PepsiCo aligned around a vision for building a more sustainable future and investing in communities. With Pioneer Foods, PepsiCo said it is adding an extraordinary team of associates who will be instrumental to growth across the continent.

"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 & 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," PepsiCo Chairman and chief executive officer Ramon Laguarta said. "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."

The transaction creates a leading food and beverage company in Africa led from South Africa, with a commitment to supporting the broad socioeconomic imperatives of employment, talent development and benefiting local suppliers. It will enable PepsiCo to expand its Sustainable Farming Program in Africa and work with local farmers in Pioneer Foods' communities — including women and rural smallholder farmers — to help boost yields, improve livelihoods and preserve precious natural resources.

PepsiCo said it is keenly aware of the importance of economic transformation through Broad-Based Black Economic Empowerment (BEE) and intends to 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," Pioneer Foods CEO Tertius Carstens said. "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."

With the transaction, PepsiCo will create a new operating sector for sub-Saharan Africa.

PepsiCo said the transaction is subject to a Pioneer Foods shareholder vote, certain regulatory approvals and other customary conditions. Closing is expected by the first quarter of 2020.

TAGS: Business
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