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PepsiCo Targets African Growth With Pioneer Foods Acquisition

PURCHASE, NY -- PepsiCo Inc. said it has entered into an agreement to acquire all the outstanding shares of Johannesburg, South Africa-based Pioneer Foods Group Ltd. for $1.7 billion. Pioneer Foods is one of the largest South African producers and distributors of branded food and beverage products. It operates mainly across South Africa and exports to more than 80 countries across the globe. Its robust, locally relevant product portfolio that complements PepsiCo's current lineup, with strong positions i...

July 28, 2019 by Emily Jed

PURCHASE, NY -- PepsiCo Inc. said it has entered into an agreement to acquire all the outstanding shares of Johannesburg, South Africa-based Pioneer Foods Group Ltd. for $1.7 billion.

Pioneer Foods is one of the largest South African producers and distributors of branded food and beverage products. It operates mainly across South Africa and exports to more than 80 countries across the globe. Its 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. At the same time, this 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. Finally, this transaction brings together two likeminded companies, with both Pioneer Foods and PepsiCo aligned around a vision for building a more sustainable future and investing in communities.

"Pioneer Foods represents a differentiated opportunity for PepsiCo and allows us to immediately scale our business in Africa," said PepsiCo chairman and chief executive Ramon Laguarta. "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."

This 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 smallholders -- to help boost yields, improve livelihoods, and preserve precious natural resources.

As part of the transaction and PepsiCo's goal to become faster and more locally focused, the beverage and snack giant will create a new operating sector for Sub-Saharan Africa (SSA). PepsiCo SSA 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.

The transaction is expected to close by the first quarter of calendar year 2020.