An agreement between the Department of Trade, Industry and Competition (DTIC) and PepsiCo has been reached, and the buyout of Pioneer Foods by PepsiCo is currently with the Competition Tribunal for approval, Trade and Industry Minister Ebrahim Patel informed during the Black Business Council's yearly summit on Thursday.
The deal is estimated to be valued at nearly R25-billion and is touted as one of PepsiCo’s largest acquisitions outside the US.
The DTIC had expressed concerns about the merger owing to the loss of a South African-owned company to a foreign firm, and the effect this would have in promoting capital accumulation in the country.
Patel indicated that following extensive engagement between the Ministry and PepsiCo over the past few months, an agreement was reached on Wednesday night.
Key terms include commitments in terms of jobs, whereby the company has guaranteed to maintain the current level of employment over a five-year period, which is about 10 000 jobs secured.
Moreover, there is a commitment to create 500 new jobs in its own operations, as well as 2 000 in supply and new companies.
Thirdly, the company will set up a R600-million development fund to support black farmers, train young people, provide advanced training and support startups through the incubation period.
The company has also committed to at least R5.5-billion in new investments in South Africa. Subject to reasonable environmental conditions, it could bolster this with a further R1-billion.
Moreover, the company has committed that its new headquarters in sub-Saharan Africa will be built in South Africa.
The company has also given a guarantee on maintaining local procurement and will honour current supply contracts.
Finally, it has agreed to a “groundbreaking” equity deal, said Patel, by promoting broad-based empowerment in the form of a worker’s trust.