PepsiCo offers to acquire Pioneer Foods, targets African growth

PepsiCo announced today that it has entered into an agreement to acquire all the outstanding shares of South African food and beverage company Pioneer Foods Group for approximately $1.7 billion. This will be the PepsiCo’s biggest deal outside of the US to date.

Pioneer Foods’ product portfolio complements PepsiCo’s current lineup, with strong positions in cereals, juices, and other African nutritional food staples, including well-known brands like Weet-Bix, Liqui-Fruit, Ceres, Sasko, Safari, Spekko, and White Star.

PepsiCo expects the acquisition to provide a solid position from which to expand into Sub-Saharan Africa.

This transaction creates a leading food and beverage company in Africa, led from South Africa, with a commitment to supporting sustainability and local suppliers. As part of this goal, PepsiCo will create a new operating sector for Sub-Saharan Africa, named PepsiCo SSA. The sector will be led by Eugene Willemsen, who most recently served as executive vice president of global categories and franchise management. Willemsen, who has been with PepsiCo for nearly 25 years, has extensive experience in growth markets, having previously led the company’s businesses in Turkey and South East Europe. This new structure will not impact PepsiCo’s reporting structure, and PepsiCo SSA will remain part of Europe Sub-Saharan Africa (ESSA) from a financial reporting perspective.

The acquisition will be funded through a combination of debt and cash, and is subject to a Pioneer Foods shareholder vote, certain regulatory approvals, and other customary conditions. The transaction is expected to close by Q1 calendar year 2020.

Pictured: Tertius Carstens, CEO of Pioneer Foods, and Eugene Willemsen, CEO, PepsiCo Sub-Saharan Africa