Pepsi has acquired Pioneer Foods Group Limited, the company that owns Nigerian bread brand, Butterfield. The deal is the first major international purchase under Pepsi’s new Chief Executive Officer, Ramon Laguarta.
Pepsi coughed out $1.8 billion to seal the acquisition of Pioneer Foods, almost a year after it acquired Israel’s SodaStream International Ltd in a $3.2 billion buyout deal in August 2018.
The deal came as a surprise, as both Pepsi and Pioneer Foods had ended their partnership four years ago.
The deal will give Pepsi ownership right of Butterfield and sausage-roll brand, Yum Yum, all of which are produced by Food Concepts Pioneer in Nigeria. Food Concepts Pioneeris a subsidiary of Pioneer Foods Group based in South Africa.
It also expands Pepsi’s footprint in Kenya and South Africa. The deal will as expected, see Pepsi takeover all brands under Pioneer Foods Group, including its Corn Flakes and Cereal brands.
The expansion deal with Pioneer provides more manufacturing facilities to Pepsi and milled maize needed for their snacks.
While the deal revives the partnership of both companies, Pioneer will bottle Pepsi products in South Africa, and shareholders are dragged out of their worries, as uncertainty hangs over the company’s stock price on the Johannesburg Stock Exchange.
Pepsi took advantage: The deal came at the time Pioneer Foods Group was struggling with consumer-spending which is dropping in South Africa. The slump in consumer spending has been caused by the country’s high unemployment and rising living costs – and this reflected on the company’s first-half profit which declined.