JOHANNESBURG - Competition authorities in the UK said yesterday that they were investigating the anticipated acquisition by PepsiCo of South African food and drinks company Pioneer Food Group.
The Competition and Markets Authority invited comments on the transaction from any interested party and said it had set a March 26 deadline to announce a decision.
In July 2019, PepsiCo - a wholly-owned subsidiary of the US multinational food, snack and beverage corporation - gave notice of its firm intention to make an offer to acquire the issued ordinary shares of Pioneer Foods for $1.7billion (R24.79bn) as it eyed Pioneer's South African base and pan-African footprint as it furthered its growth strategy.
The deal was approved by shareholders in October last year and is subject to review by the competition authorities, but is expected to be finalised early this year.
Pioneer Foods, with a R24bn market valuation, yesterday released its annual report for the year ended September 2019, with senior executives acknowledging that it was on the brink of a sea-change in the company once the merger had competition approval both abroad and in South Africa.
Chairperson Zitulele Combi, chief executive Tertius Carstens and chief financial officer Felix Lombard said: "Our most recent years have been tough, but we've collectively pushed through to a bigger and sustainable future.
"We are now at the start line of the next lap and look forward to sharing the next phase of this journey with you.”
They said that getting through the actual nuts and bolts of merging the two businesses would present some challenges, but the potential benefits for both were broad and long-term.
Pioneer Foods said it had invested heavily in plant capacity and products in recent years, which would provide a foundation for growth in South Africa and a major drive into Africa and it target markets.
The management also flagged that South Africa's economy was unlikely to improve quickly, while global trade was subdued by trade disputes.
Pioneer Food Group reported a 15percent fall in earnings to R910million in the period under review.
The report said the board had declared a final dividend of R2.19 per share and although it was lower than the previous year, it is was line with the maximum dividend agreed with PepsiCo.
Pioneer Foods shares closed 0.15percent lower at R108.84 on the JSE yesterday.