The US-based food and drinks giant, PepsiCo, has announced that it is interested in buying out Pioneer Food Group, popularly known for it’s Ceres juices.
The CEO of PepsiCo, Mr Eugene Willemsen expressed in a statement that,
“This is a very exciting day for both companies and represents a significant step in expanding our footprint in sub-Saharan Africa”
He added that;
” Pioneer’s portfolio of products compliments our brands.”
This statement was made shortly after the American based brand offered an R110 per share deal to Pioneer foods which caused a 28.8% boost in its shares. Pioneer’s CEO supporting the deal and optimistic about the deal brings, saying, it reflects the credibility of pioneer foods and South Africa as a whole.
“In this deal, Pioneer gets access to leading global capabilities and also to an impressive geographic footprint.”
PepsiCo’s offer to buy Pioneer, South Africa’s packaged goods company has fallen in line with JP Morgan’s analysis that Pioneer “screens well as an acquisition target” posed as a takeover target with higher probability of the offer coming from a foreign investor seeing as it has been trading at a low for a while.
PepsiCo’s deal worth $1.7 billion (R16.7billion) put on the table for consideration marks the highest ever to be offered by Pepsi to any other company offshore of its home base. Anthony Clark, an independent analyst, commented on PepsiCo’s strategy to buy
“a great company with strong brands at the lowest ebb of its cycle in anticipation of increased earnings”.
He also stated that the price fails to reflect half of the price share of it high in 2015 which was above R210 per share. However, Clark affirmed that Pioneer needed a “rich parent” to “take it to the next level.”
The deal is already supported by 53% of Pioneer’s shareholders which include its largest single shareholder Zedar, an investment company with 28.23%. This, in turn, gives an inclination that the deal will pull through. Zedar has obvious reasons for its support as it has been in debt for a while now and this deal will see to its settlement. Also, the cape town-based company already made it known that it is willing to invest in new companies or in its other units.