- Global food giant PepsiCo and South African Pioneer Foods have announced plans for a deal worth around R24 billion – the biggest ever for the US company outside its home country.
- This is "a demonstration of PepsiCo’s belief in South Africa’s potential and its long-term commitment to the country", Pioneer said.
- PepsiCo will be paying Pioneer shareholders a considerable premium for their shares, in the belief it can make a lot of money out of sub-Saharan Africa with "African nutritional food staples" such as Weet-Bix and White Star.
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Global food giant PepsiCo plans to spend around R24 billion to buy South African group Pioneer Foods, the two companies announced on Friday morning.
Besides its namesake drink, PepisCo owns the Lay's, Fritos, and Doritos chip brands, and food brands such as Quaker Oats that have no presence in South Africa, but are a part of everyday American life.
Pioneer Foods brands include Bokomo, Maizena, Marmite, and Bovril.
While Pioneer exports to a host of countries, most of its operations are in South Africa. PepsiCo, on the other hand, calculates that its products are used every day in 200 countries around the world.
The companies said PepsiCo had made a firm intention to offer a cash price of R110 per share to current Pioneer shareholders, a premium of 56% of the share price measured over the the last month.
The deal "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," the US company said in a press statement.
Pioneer told its shareholders that the deal will be "one of PepsiCo’s largest acquisitions outside of the United States, which is a demonstration of PepsiCo’s belief in South Africa’s potential and its long-term commitment to the country".
The transaction has already been approved by the boards of both companies.
* This article has been updated to correct the expected value of the transaction.
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