Competition Commission gives the nod to sale of Pioneer Foods to PepsiCo
The approval comes with conditions that include BEE and a moratorium on retrenchments
The Competition Commission has recommended to the Competition Tribunal that the $1.7bn acquisition of Pioneer Foods, the owner of Sasko bread, by US snack giant PepsiCo be approved with conditions.
The conditions include a moratorium on retrenchments and a R1.6bn BEE deal.
“The proposed transaction, which will result in significant public interest benefit for SA, including the transfer of at least R1.6bn in equity to workers, is unlikely to result in a substantial prevention or lessening of competition in any relevant markets,” the commission said on Tuesday.
The other merger conditions suggested by the commission include the creation of additional jobs. The details of the number of jobs to be created and the amount of money to be invested is still confidential at the request of both companies, competition commission spokesperson Sipho Ngwema said.
The commission also wants “significant investment in the operations of the merged entity, the agricultural sector and the establishment of an enterprise development fund”. What the enterprise fund is for and how much it will cost was also not disclosed.
The proposed acquisition of Pioneer Foods, which also makes brands such as Weet-Bix and Ceres juices, will be PepsiCo’s second-largest since 2010 and its biggest in sub-Saharan Africa. PepsiCo owns Simba, Pepsi, 7UP, NikNaks, Lays and Doritos snack brands.
Eugene Willemsen, CEO of PepsiCo sub-Saharan Africa, said in 2019 the purchase of the SA food company represented “a significant step in expanding our footprint in sub-Saharan Africa”.
Hit by a tough consumer environment in SA, Pioneer’s share price has been in decline for the past two years. The R110-a-share offer in July 2019 was a 56% premium on the average of the month before the offer.