PepsiCo Inc. has agreed to buy South Africa’s Pioneer Foods Group Ltd. for $1.7 billion, as the snack-and-beverage giant looks to build up its business in sub-Saharan Africa.
Pioneer Foods is one of South Africa’s largest producers and distributors of branded food and beverage products, and PepsiCo said it planned to use that market presence as a beachhead for expansion across the continent.
PepsiCo joins a slew of companies from retailers to hotel chains to beer makers that are expanding in Africa. The continent offers businesses the world’s fastest-growing population, a number of swiftly expanding economies and a growing middle class.
“We believe that the African continent represents a tremendous growth opportunity,” Eugene Willemsen, PepsiCo’s newly appointed chief executive for sub-Saharan Africa, said in an interview, citing the continent’s population and expanding economies.
PepsiCo said it would pay 110 South African rand ($7.93) for each Pioneer share, a nearly 42% premium to Thursday’s closing price. The stock traded up 32% on Friday.
The deal is PepsiCo’s second-largest acquisition outside the U.S. since 2010. Last year, the company bought Israel-based SodaStream International Ltd. for $3.2 billion.