Tuesday, 11 February 2020 19:20

 

The Competition Commission conditionally approved PepsiCo's takeover of food and drinks producer Pioneer Foods.

Pioneer Foods is a South African producer and distributor of a range of branded food and beverage products. It operates mainly in South Africa, providing wholesale, retail and informal trade customers with its products and exports to more than 80 countries. Its food brands include Sasko, White Star, Weetbix, Safari and Wellingtons, while its beverage brands include Ceres, Liquifruit and Fruitree.

PepsiCo has struck a deal to buy Pioneer Foods in July 2019, lifting the target firm's shares and boosting a sector that has been hit by drought and tough trading conditions.

PepsiCo supplies various packaged foods and snacks throughout the world. PepsiCo, through Simba, supplies several ready-to-eat products in South Africa under well-known brands which includeSimba, Lays, Dorito’s, NikNaks and Fritos.

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.

According to the Commission, the proposed deal will result in "significant public interest benefit for South Africa", and is unlikely to result in a substantial prevention of lessening of competition in any relevant markets.

Further recommended conditions include a significant investment in the operations of the merged entity, the agricultural sector and the establishment of an enterprise development fund; as well as a B-BBEE transaction to the value of at least R1.6 billion that will promote a greater spread of ownership and participation by workers and historically disadvantaged South Africans.