South Africa's Competition Commission has recommended that the Competition Tribunal conditionally approve the acquisition of Pioneer Foods by a wholly-owned subsidiary of United States multinational food and beverage company PepsiCo.
Simba gave notice last July of its intention to acquire the issued ordinary shares of Pioneer Foods in a deal then estimated at nearly R25-billion and touted as one of PepsiCo’s largest acquisitions outside the US.
"The proposed transaction, which will result in significant public interest benefit for South Africa including the transfer of at least R1.6-billion in equity to workers, is unlikely to result in a substantial prevention or lessening of competition in any relevant markets," the Competition Commission said in its Tuesday statement.
PepsiCo, through Simba, supplies ready-to-eat products in South Africa under well-known brands including Simba, Lays, Doritos, Nik Naks and Fritos.
Pioneer Foods, which operates mainly in South Africa, boasts brands such as Sasko, White Star, Weetbix, Safari, Wellingtons, Ceres, Liquifruit and Fruitree.
The Commission said it had recommended that the Tribunal approve the merger subject to several public interest commitments including a moratorium on merger related retrenchments for a certain period and the creation of additional jobs at the merged entity.
The deal is also conditioned upon significant investment in the operations of the merged entity, the agricultural sector and the establishment of an enterprise development fund ss well as a broad-based black economic empowerment worth at least R1.6-billion that will promote a greater spread of ownership and participation by workers.