Pioneer-PepsiCo merger

SA competition watchdog approves Pioneer/PepsiCo merger

The Competition Commission has recommended that the Competition Tribunal give the green light to a R24bn deal that will see PepsiCo take over Pioneer Foods.

The deal’s benefits are “significant”, the Commission said, while recommending that it be approved subject to conditions including job creation, local investment and a minimum R1.6-billion B-BBEE transaction.

PepsiCo struck a deal to buy South Africa’s Pioneer last July, lifting the target firm’s shares and boosting a sector that has been hit by drought and tough trading conditions. Pioneer’s brands include Weet-Bix, Sasko, Pro-Nutro and Spekko rice.

PepsiCo offered R110 per share – a premium of around 56% – to acquire Pioneer.

The commission recommended that the Competition Tribunal, which makes the final decision, approve the merger subject to public interest commitments, it said in a statement.

Those include a moratorium on merger-related job cuts for a certain period, and the creation of additional positions at the merged firm.

The company is also required to invest in the operations of the merged company and the agricultural sector, and establish an enterprise development fund.

It will also have to undertake a black empowerment deal to the value of at least R1.6 billion [$108 million] “that will promote a greater spread of ownership and participation by workers [and] historically disadvantaged South Africans”.

Global giant PepsiCo consists of six divisions which manufacture and distribute snacks and beverages that are already available in South Africa including Simba, Nik Naks, Lays, Doritos and Pepsi soft drinks.