Johannesburg - Pioneer Foods announced it was venturing into East Africa by acquiring a 49.89 percent stake in Weetabix East Africa for an undisclosed amount.
This stake sees Pioneer in partnership with Weetabix UK.
Pioneer only acquired the 49.89 percent stake because Weetabix UK wanted to keep its majority stake at more than 50 percent in East Africa. The move is to consolidate the holding in their group accounts in keeping with international accounting practice.
It is not the first time Pioneer has acquired another business. In August Pioneer announced that it agreed to acquire the entire issued share capital of Streamfoods for a purchase consideration £7.5 million (R133m).
Damon Buss, an equity analyst at Electus Fund Managers, said the rationale was that Pioneer was looking for growth, which could only come from three areas (price, volumes and acquisitions/category expansions). “Given that within South Africa they have high market shares in well-developed categories, which when combined with a weak macroeconomic environment means growth opportunities within the SA businesses are relatively constrained.”
The transaction is subject to Kenyan regulatory approvals.
Pioneer shares rose 2.41 percent to R160.80 yesterday.
BUSINESS REPORT