PepsiCo’s South African acquisition given green light by local competition watchdog

By Gill Hyslop contact

- Last updated on GMT

PepsiCo has been given the nod by South Africa's Competition Commission to purchase Pioneer Foods. Pic: Pioneer Foods
PepsiCo has been given the nod by South Africa's Competition Commission to purchase Pioneer Foods. Pic: Pioneer Foods

Related tags: Pepsico, Pioneer Foods, Simba, The South African Competition Commission

The South African Competition Commission has found that PepsiCo’s R24bn ($1.7bn) acquisition of Pioneer Food Group will result in ‘significant’ public interest benefits for the country.

Simba (Pty) Ltd – a South African-based wholly-owned subsidiary of the US snacking giant – gave notice last July of its intention to buy Pioneer, in a deal touted as one of PepsiCo’s largest acquisitions outside the US.

According to Sipho Ngwema, head of Communication for Commission, the ‘significant benefits for South Africa’ also includes the additional transfer of at least R1.6bn ($108m) into a black empowerment fund to ‘promote a greater spread of ownership and participation by workers (and) historically disadvantaged South Africans’.

PepsiCo is also required to create additional positions at the merged company, place a moratorium on merger-related job cuts for a certain period, invest in the operations of the merged entity and the country’s agricultural sector.

Given the nod

“The proposed transaction, which will result in significant public interest benefit for South Africa including the transfer of at least R1.6 billion in equity to workers, is unlikely to result in a substantial prevention or lessening of competition in any relevant markets,”​ the Competition Commission said in a statement.

PepsiCo – through Simba – supplies its ready-to-eat snacks to the South African market under the brands Simba, Lays, Doritos, Nik Naks and Fritos.

Pioneer Foods – which operates mainly in South Africa, but also exports to more than 80 countries – manufactures an extensive range of foods, including cereals, flour, maize meal (known as mielie meal in South Africa) and fruit juices, among others, under the brands Sasko, White Star, Weetbix, Safari, Wellingtons, Ceres, Liquifruit and Fruitree.

The proposed deal has seen Pioneer’s shares rise and will certainly boost a sector that has been hit by drought and tough trading conditions.

The Commission has recommended the Competition Tribunal – which makes the final decision – to approve the merger. A tribunal hearing is expected to take place before the end of February.

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