Pioneer takeover gets Commission approval
INCE CONNECT / 13 FEBRUARY 2020 - 14.11 / STEPHEN GUNNION
The Commission has attached a number of conditions including job retention, investment and an empowerment deal worth at least R1.6 billion.
The Competition Commission has given its go-ahead for Pioneer Foods' $1.7 billion takeover by US food and beverages giant PepsiCo. The Commission has recommended that the Competition Tribunal approve the deal, subject to certain conditions.
Local competition clearance was one of the main obstacles for PepsiCo in the Pioneer takeover, which is worth close to R25 billion at current exchanges rates. Last week, Pioneer said it didn't expect a probe by the UK's Competition and Markets Authority (CMA) to add further delays to the approvals process as its approval was non-suspensory.
The Commission found that the proposed deal would result in a significant public interest benefit for the country and was unlikely to result in a substantial negative impact on competition in any relevant markets.
Among the conditions the Commission wants included are a moratorium on merger-related retrenchments for a certain period, the creation of more jobs at the merged entity, investments including in the agricultural sector and an empowerment deal worth at least R1.6 billion to make ownership of the company more inclusive.
The deal was first announced last July and shareholders approved its R110 per share bid in October. The offer came at a 56.5% premium to the 30-day volume-weighted average traded price of Pioneer's shares up to 12 July, the day before it cautioned the market it was in talks.
PepsiCo, which is listed on the US's NASDAQ, plans to use SA as a hub for expansion throughout Africa, while providing Pioneer with access to new markets and improving its ability to compete more effectively in Africa and beyond. Apart from Pepsi-Cola, it owns brands including Mountain Dew, 7UP, Nik Naks, Frito-Lay, Doritos, Simba, Quaker Oats and Tropicana Juice, amongst others. Pioneer's brands include Sasko bread and flour, Weet-Bix, ProNutro, Bokomo corn flakes, Liqui Fruit and White Star maize meal.
The parties are pleased to note that the South African Competition Commission found that the PepsiCo Offer will result in significant public interest benefits for South Africa," the companies said in a statement.
The Tribune hearing is expected to take place before the end of the month. Pioneer's shares rose 0.6% to R109.25 yesterday.
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