For Pioneer, the group will, in turn, have access to PepsiCo's brand portfolio for Africa, including Simba, Doritos, Nik-Naks, as well as PepsiCo's bottling network, boosting local presence and go-to-market capability.
"Pioneer Foods represents a differentiated opportunity for PepsiCo and allows us to immediately scale our business in Africa", PepsiCo Chief Executive Officer Ramon Laguarta said in the statement.
U.S. multinational food, snack, and beverage corporation PepsiCo has put in an offer to acquire all the outstanding shares of South African packaged goods company Pioneer Foods at a R110 per share premium.
The US food and drinks company has offered 110 rand per share in cash for each Pioneer share, which represents a 56% premium to the 30-day volume weighted average price prior to the cautionary announcement on 15 July.
Pioneer Foods - which manufactures Weetbix, Liqui-Fruit, Ceres, Sasko, Safari, Spekko and White Star - is one of the largest South African producers and distributors of a range of branded food and beverage products and posted revenue of R20.2-billion in 2018.
It added that the acquisition, valued at approximately USA $1.7 billion, will be funded through a combination of debt and cash, and "has been unanimously approved by the boards of directors of both companies".
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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.
PepsiCo expects the acquisition to provide a solid position from which to expand into Sub-Saharan Africa.
Zeder Investments, Pioneer's biggest shareholder with a 27% stake, will vote in favour of the deal, alongside investors holding more than half the food maker's stock. PepsiCo is keenly aware of the importance of economic transformation through Broad-Based Black Economic Empowerment ("BEE") and intends to support Pioneer Foods' BEE program.
He said that the company was seeking to expand aggressively in sub-Saharan Africa, a region which is expected to double in population to 2.2 billion people by 2050.
While Pioneer exports to a host of countries, most of its operations are in South Africa.