American multinational food, snack, and beverage corporation PepsiCo has put in an offer to acquire stakes valued at approximately $1.7 billion of South African packaged goods company Pioneer Foods. The offer is regarded as one of Pepsico’s largest acquisitions outside the United States. The Pepsico has announced that it has signed agreement with Pioneer Food Group to acquire all outstanding shares for R110 per share, a 56.5% premium as of July 12.
The agreement is expected to facilitate Pepsico’s expansion in Africa. Pioneer reported a decline in half-year earnings in May and the transaction may lead to more foreign direct investment according to the Pioneer’s statement.The Pepsico stated that Pioneer’s product portfolio was complementary to its own which would support its expansion in sub-Saharan Africa by adding manufacturing and distribution capabilities.“Africa is an important component in PepsiCo’s expansion strategy due to its attractive macro-economic prospects and the relative affordability and value positioning of many of PepsiCo’s products,” it said It also reported that the acquisition has been “unanimously approved by the boards of directors of both companies”. The share price of Pioneer responded positively to the news and was up by 28.87% to R100 as of 9:30 am on 19 July. After going through various approval processes, the deal is expected to be completed by June 2020.
Pioneer, is the latest consumer goods firm to be the target of a buyout after South Africa’s Clover Industries, began takeover talks with a consortium of companies called Milco SA last year.
