U.S. food and beverage manufacturer PepsiCo has agreed to buy South Africa-based Pioneer Foods Group for roughly $1.7 billion as a way to expand its global footprint.
The acquisition will help PepsiCo scale its business in the region while enhancing Pioneer Foods’ manufacturing and go-to-market capabilities, according to a press release. Pioneer Foods, which earned $1.46 billion in revenue in 2018, brings a “robust, locally relevant” product assortment of cereals, juices and other popular African foods under the Weet-Bix, Liqui-Fruit, Ceres, Sasko, Safari, Spekko and White Star brands to PepsiCo's portfolio.
“Pioneer Foods represents a differentiated opportunity for PepsiCo and allows us to immediately scale our business in Africa,” said PepsiCo chief executive officer Ramon Laguarta. “[It] 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” to establish a more sustainable future and invest in communities.
Consequently, the transaction will create a new operating unit for Sub-Saharan Africa that will be led by 25-year PepsiCo vet Eugene Willemsen, executive vice president of global categories & franchise management.
The acquisition additionally enables PepsiCo to expand its sustainable farming program in Africa by working with farmers in Pioneer Foods' communities to help "boost yields, improve livelihoods, and preserve precious natural resources."
"Today's announcement marks a very exciting milestone for Pioneer Foods and our people, and highlights the strength of what we have created," said ceo Tertius Carstens. "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."
The deal is expected to close by the first quarter of 2020.