JOHANNESBURG - A wholly-owned subsidiary of US multinational food, snack and beverage corporation PepsiCo has given notice of its firm intention to make an offer to acquire the issued ordinary shares of South African packaged goods company Pioneer Foods, the two said on Friday.
In a joint statement, the companies said the transaction was one of PepsiCo’s largest acquisitions outside the United States and a demonstration of its belief in South Africa’s potential and of its long-term commitment to the country.
The PepsiCo offer will be made at a base price of R110 per per Pioneer Foods ordinary share, with possible increases linked to dividends.
"The base price represents a premium of 56.5 percent to the 30-day volume weighted average traded price of Pioneer Foods ordinary shares of R70.31, as at 12 July," the companies said.
An independent board established in relation to the PepsiCo offer unanimously recommended the PepsiCo offer to shareholders.
"PepsiCo believes Africa is a key market for future growth. A meaningful portion of PepsiCo’s existing portfolio is in developing and emerging markets where further expansion is a high priority for PepsiCo," the joint statement said.
It said PepsiCo’s existing portfolio, with its broad nutritional offerings, could provide many benefits to both the South African and broader African consumer. Acquiring Pioneer Foods would increase PepsiCo’s presence in a country and region of high growth potential.
"PepsiCo is confident that Pioneer Foods represents a uniquely attractive investment opportunity and is closely aligned with key pillars of PepsiCo’s long-term strategic plan," the two companies said.
"Together, the two groups’ respective product portfolios, geographic presence, and capabilities have the potential to create an exciting opportunity for future business in the region."
PepsiCo brings extensive category knowledge and global capabilities, such as marketing and research and development, which it intends to use to further drive growth in Pioneer Foods’ portfolio and develop products tailored to local consumer preferences.
Pioneer Foods’ manufacturing and go-to-market capabilities will expand penetration of PepsiCo’s products to South African consumers. Pioneer Foods forms an important part of PepsiCo’s strategy to expand not only in South Africa but in sub-Saharan Africa as well.
The companies said the foreign direct investment which would result from the implementation of the transaction would contribute meaningfully to the growth of the South African economy under its newly elected leadership.
"The transaction could also help attract further foreign direct investment and reinforces the case that South Africa is an attractive destination for multinationals," the joint statement said.
Pioneer Foods said on Friday a subsidiary of PepsiCo had given notice of its firm intention to make an offer to acquire its issued ordinary shares.