PepsiCo ramps up African presence with purchase of South African maize meal giant

By Gill Hyslop contact

- Last updated on GMT

Mielie meal or maize meal is a staple 'porridge' in southern African countries. Pic: ©GettyImages/wilpunt
Mielie meal or maize meal is a staple 'porridge' in southern African countries. Pic: ©GettyImages/wilpunt

Related tags: Pioneer Foods, maize meal, Africa, Sustainable agriculture

PepsiCo has agreed to acquire White Star and Pioneer Foods Group for R23.63bn ($1.7 billion), which will create a leading food and beverage company in Africa with a commitment to building a more sustainable future and investing in communities.

Pioneer Foods manufactures maize meal, samp, maize flour and instant maize porridge, which are a staple to millions of South Africa’s population.

Maize meal – also known as mielie meal or mieliepap – is a coarse flour made from maize, known as mielies in southern Africa. The flour is made into a porridge or ‘pap’ (also known as ‘nshima’ or ‘sadza’) - similar in texture to polenta - as well as Umqombothi (an African beer).

The company also mills wheat into flour – the cornerstone for over 60 years – as well as other branded cereals, breads and juices under the brand names Weet-Bix, Sasko, Spekko and Ceres, among others.

The Group operates mainly in South Africa and exports to more than 80 countries across the globe, particularly across Africa. It posted revenue of R20.2bn in 2019.

PepsiCo said the acquisition will be funded through a combination of debt and cash, and has been unanimously approved by the board of directors of both companies.

However, it is still subject to a Pioneer Foods shareholder vote, certain regulatory approvals and other customary conditions.

The deal is expected to be completed by the first quarter of 2020 and will result in the creation of a new business unit for the Sub-Saharan Africa region.

The unit will be headed by Eugene Willemsen, who has been with PepsiCo for nearly 25 years, most recently as EVP of global categories and franchise management.

The Frito-Lay maker said the new division will not impact its reporting structure and will remain part of its Europe Sub-Saharan Africa unit, but represents a ‘differentiated opportunity’ to allow PepsiCo to scale its business in the region.

Shared vision

“Pioneer Foods forms an important part of our strategy to not only expand in South Africa, but further into Sub-Saharan Africa as well,”​ said Ramon Laguarta, PepsiCo’s chairperson and CEO.

“Our businesses are highly complementary, and we look forward to working with the Pioneer Foods team to successfully build and implement a shared vision in the region.”

The deal will enable PepsiCo expand its sustainable farming program in Africa to work with farmers to help boost yields, improve livelihoods and preserve natural resources.

“As part of PepsiCo, we will have greater scale to expand our leading brands, greater capital to invest in local agriculture and people, greater access to leading global capabilities and a partner committed to taking our company to even greater heights,”​ added Tertius Carstens, Pioneer Foods’ CEO.

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