Business Strategies

PepsiCo To Buy South African Food Company

Jul 19, 2019

PepsiCo will increase its footprint in Africa with the purchase of Pioneer Foods, a South African processor of grain-based products, juices and other foods.

PepsiCo has agreed to pay $1.8 billion for Pioneer, maker of Weet-Bix breakfast cereal and Ceres fruit juice. The purchase has the approval of Pioneer’s biggest investor, a capital firm that owns 27% of the company, and enough other investors to make a majority. The deal is expected to close in the first quarter of next year.

Buying Pioneer will give PepsiCo an increased presence in sub-Saharan Africa, with brands and plants in South Africa, Nigeria and Kenya. It also will shore up PepsiCo’s sources of ground corn for snacks.

Pioneer had been languishing, due to a general slump in South Africa’s consumer sector that is part of the country’s economic woes. An analyst said in a tweet quoted by Bloomberg that more foreign companies may move in to pick up South African companies and assets at bargain prices.