Pioneer doesn’t expect CMA to delay takeover


Pioneer doesn’t expect CMA to delay takeover

Published Date: 2020-02-10 | Source: Stephen Gunnion | Author: Stephen Gunnion

Pioneer doesn’t expect CMA to delay takeover

The food group says it is waiting for news from the relevant authorities and will provide more feedback this week.

Pioneer Foods says a probe by UK regulators into its R24.4 billion takeover by US food and beverages giant PepsiCo should not add further delays to the approvals process. That's despite the Competition and Markets Authority (CMA) inviting comments from interested parties, with a 26 March deadline to announce whether it will refer the merger for a phase 2 investigation.

In an update on Friday, Pioneer said it expected to be in a position to further update investors on the process this week. It is one of the UK's top cereal makers, providing white label goods for a number of leading retailers and brands. Just over two years ago, it bulked up its presence in the breakfast market with the acquisition of The Good Carb Food Company, the UK-based owner of granola brand Lizi's, through its UK subsidiary Pioneer Foods UK.

The PepsiCo deal was announced last July and filed with the Competition Commission on 6 September 2019. Pioneer said discussions with the SA regulator and authorities in other jurisdictions were at an advanced stage. Although a formal submission was made by the parties to the CMA, it said its approval of the transaction was non-suspensory and therefore should theoretically not delay the implementation of the transaction once the other conditions had been fulfilled or waived.

Shareholders approved its R110 per share takeover 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.

Pioneer's shares closed 0.2% down at R108.50 on Friday.

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