US maker of cooldrinks and snack foods PepsiCo has had its eye on the southern African consumer market for decades. Its effort to build a base in South Africa after 1994 ended in disaster and the company abandoned its effort to build a distribution network from scratch. The acquisition of Pioneer Foods, a giant in the local fast-moving consumer goods industry, offered it the perfect opportunity to enter the African market.
The Covid-19 pandemic and the lockdown measures adopted by South Africa and other countries brought many prospective mergers and acquisitions to a grinding halt as management concentrated on navigating their businesses through the crisis.
Deals that sneaked in ahead of the pandemic include Distell’s sale of Plaisir de Merle and Alto wine estates and Tiso Blackstar’s sale of Gallo Music to Lebashe Investment Group’s Arena Holdings for R75-million.
Where deals went ahead, often the terms were reassessed, with buyers concerned that earnings had been negatively affected by the economic turmoil. Tongaat’s sale of its starch business to a Barloworld subsidiary for R5.35-billion was an example. Although announced in February, the deal only went ahead in October after Barloworld satisfied itself that earnings had not been materially damaged.
The second wave of deals, which is gaining momentum, involves those where companies seek to bolster liquidity, or where international and local private equity players identify new opportunities for acquisitions arising out of the turmoil.
Both Aspen and Sasol sold some of the family silver to manage debt levels. In Aspen’s case, it sold the rights to its European thrombosis business to US pharmaceutical company Mylan for almost R12.82-billion in a deal that is likely to be value accretive.
Negotiating and concluding these deals entirely via Zoom meetings has introduced a new, more complex, dimension to dealmaking that often goes unnoticed.
With lenders starting to circle, debt-laden chemicals and energy group Sasol had no option but to sell 50% of its Lake Charles Chemical Project to LyondellBasell for R33-billion.
The bargains of the century include the sale in February of the somewhat neglected CNA chain by Edcon as it attempted its (now failed) journey back to financial health. The chain’s 167 stores were purchased lock, stock and barrel by the former CEO of Exclusive Books Benjamin Trisk and a consortium led by Astoria Investments.
Devastated by the Covid-19 lockdowns, Edcon was forced into a firesale of other assets. In July, TFG agreed to acquire 382 viable Jet stores and other selected Jet assets for R480-million.
Another opportunistic investment was Mr Price’s recent acquisition of Power Fashions, a value-oriented family-owned retailer with 170 stores across southern Africa.
The year also saw considerable introspection and portfolio rationalisation, resulting in asset manager Ninety One selling its local administration firm Silica to global wealth management platform FNZ, while MTN realised some capital through the sale of its 18.5% interest in Nigerian e-commerce firm Jumia.
The year had its share of delistings too, with property companies Intu and Grit Real Estate, and mining company Assore, leading the charge. Afrox will also delist after its German parent, the Linde Group, extended an offer to all the holders of Afrox’s shares that it doesn’t already own.
Outside of Sasol, the biggest deal of the year was the $1.7-billion (R26-billion) purchase of local food company Pioneer Foods by US giant PepsiCo, which was given the go-ahead by the Competition Tribunal in March, making PepsiCo’s return to South Africa official after its abortive efforts after 1994.
PepsiCo’s July offer of R110 a share was more than 50% of the value of Pioneer Foods’ shares in the month preceding the offer.
The deal also included a BBBEE ownership plan that will see R1.6-billion worth of PepsiCo stock issued to a local broad-based workers’ trust. This holding will be unencumbered and will allow for immediately realisable dividends. The stock in PepsiCo must, after five years, be converted into a direct shareholding in Pioneer of up to 13%.
Known for brands such as Weet-Bix, Liqui Fruit, White Star and Bokomo Corn Flakes, Pioneer has a massive distribution network throughout South Africa and across southern Africa. This type of retail influence is exactly what appeals to PepsiCo, whose brands include Gatorade, Quaker Foods, Ruffles and, of course, Pepsi.
At the time of the deal, PepsiCo CEO and chairman Ramon Laguarta said Pioneer Foods represents a “differentiated opportunity” for PepsiCo and allows the company to immediately scale its business in the region.
Like Walmart, which acquired 51% of Massmart in 2011, the acquisition is premised on its ability to provide a platform for growth in South Africa and southern Africa. Aside from establishing South Africa as its regional headquarters, PepsiCo committed to investing R5.5-billion over five years to develop the overall operations of Pioneer Foods.
It seems likely that these efforts will be slightly delayed due to the disruptions of the pandemic and subsequent lockdowns. There is no doubt that 2021 will be an interesting year.
For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.
Sources: [1], [2]. Image sources: [1], [2].
Eskom Urges South Africans to Use Electricity Sparingly
Eskom, South Africa’s main electricity provider, urged South Africans to continue using electricity sparingly to help them limit the impact of loadshedding as it will be implementing stage 2 loadshedding from 10pm tonight until 5am tomorrow morning.
Eskom spokesman Sikhonathi Mantshantsha said that stage 2 loadshedding will be repeated again Wednesday night starting at 10pm and 5am in the morning.
“This loadshedding is necessary to preserve emergency generation reserves in preparation for higher demand expected in January when economic activity resumes. During this period Eskom will continue to pursue increased reliability maintenance as planned and previously communicated to the public throughout the year,” said Mantshantsha.
He added that Eskom currently had over 9 700 MW of capacity on planned maintenance while another 11 300 MW was unavailable due to unplanned maintenance.
Eskom said their teams were working around the clock to return as many of these generation units to service. Mantshantsha said they would communicate timeously should there be any significant changes to the power system and to the loadshedding as planned today.
About two weeks ago, Eskom implemented Stage 2 loadshedding that started Secember 12 at 6am until 11pm. At the time, Eskom said it needed to implement the loadshedding in order to replenish the depleted emergency generation reserves for the coming week.
“As Eskom ramps up its planned maintenance during the lower demand summer period, as previously committed, it has had a large number of unforeseen breakdowns from the ageing, unreliable plant over the past few days. In addition to this, Eskom has taken two generation units at the Kendal Power Station offline in compliance with environmental legislation. Similarly, four generation units at the Camden Power Station have been taken offline to conserve the integrity of the ash dam facility,” said Eskom at the time.
For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.
Sources: [1], [2]. Image sources: [1], [2].
Nigeria Places Travel Restrictions on South Africans to Curb New COVID Variant
Passengers travelling from South Africa to Nigeria will be subject to strict regulations effective from Monday 28 December 2020. The latest travel restrictions follow the discovery of 501.V2, a mutation of Covid-19 which is more contagious than the original virus.
While several countries have announced outright travel bans prohibiting the entry of passengers departing, or transiting through, South Africa, Nigeria has opted for a monitored approach.
Passengers from the UK and South Africa will be allowed to enter Nigeria on the condition that they present two documents. Travellers will need to obtain a pre-departure permit to fly – in the form of a unique QR code – from the Nigeria International Travel Portal. Additionally, visitors are required to submit proof of a negative Covid-19 PCR test, obtained within 96 hours of the scheduled departure time.
Incoming passengers will be received and processed separately when disembarking from their flights. Nigeria’s Public Health Authority will oversee the arrival of passengers from both the UK and South Africa, with stringent isolated screening processes in place to prevent Covid-19 transmission within the confines of the airport.
Even with a negative Covid-19 test result, all passengers arriving from South Africa will be subjected to a mandatory seven-day quarantine period. Travellers will again be tested on the seventh day of self-isolation. A negative result will allow travellers to exit quarantine while a positive PCR test will require further isolation for a period prescribed by the Public Health Authority.
Incoming travellers will be monitored closely throughout their quarantine stay and have been urged to comply with all restrictions imposed by the Public Health Authority.
The government has also issued a stern warning to airlines which fail to follow protocols. Penalties include a fine of $3,500 (R51,000) for each defaulting passenger. Airlines may also be expected to return non-Nigerian defaulting passengers. Repeated non-compliance by any airline will lead to the suspension of the Airline`s Approval/Permit to fly into the country.
The announcement comes just days after the African Centre for Disease Control and Prevention (CDC) revealed that a new Covid-19 variant had been discovered in Nigeria. “It’s a separate lineage from the UK and the South African lineages,” said John Nkengasong, director of the African CDC.
Nkengasong added that it was still too early to tell if the new variant discovered in Nigeria was more contagious.
For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.
Sources: [1], [2]. Image sources: [1], [2].
AstraZeneca’s Vaccine is Expected to Work on South Africa’s New COVID Variant, says CEO
AstraZeneca’s coronavirus vaccine is expected to be effective against mutating Covid-19 variants, including those discovered in South Africa and the UK.
“So far, we think the vaccine should remain effective,” CEO Pascal Soriot told The Sunday Times.
“But we can’t be sure, so we’re going to test that,” he told the newspaper. The vaccine is currently being trialled in South Africa. In saying AstraZeneca’s vaccine will protect against strains of the coronavirus, Soriot echoed Ugur Sahin, CEO of BioNTech. There was a “relatively high” possibility that the Pfizer-BioNTech vaccine would work against variants, Sahin said last week. The Pfizer-BioNTech vaccine is also being tested in South Africa.
The new virus variant discovered in South Africa seems to be more transmissible than the original virus, local scientists said last week.
In addition, two of the mutations in the new South African variant reduce virus sensitivity to some antibodies, meaning that these antibodies may not be as effective against this new variant. These mutations were not seen in new variants in the UK and Australia.
The variant discovered in the UK could be about 70% more transmissible and had already infected about 40,000 people in the UK by midweek, per Reuters.
The new strain was discovered in Japan on Friday, brought by travellers from the UK, according to Reuters. About seven people, including five who had traveled from the UK to Japan, tested positive, The Associated Press reported on Sunday.
On Monday, Japan plans a sweeping ban on foreigners entering the country, in part because of the new strains, according to The Associated Press.
The UK government signed deals for 100 million doses of the AstraZeneca vaccine, which was developed in partnership with Oxford University. That vaccine is the largest single order from the government, which has signed deals for 357 million doses of various vaccines.
As of Christmas Eve, about 617,000 people in the UK had received doses of Pfizer’s vaccine, according to official statistics.
The UK government is now reviewing vaccines from AstraZeneca and Moderna.
“The NHS across the UK is working incredibly hard to scale up the vaccination programme as fast as they can to make sure everyone on the priority list can get their vaccine easily,” said Nadhim Zahawi, the minister overseeing vaccine deployment, in a statement.
For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.
Sources: [1], [2]. Image sources: [1], [2].
PepsiCo Makes a South African Comeback
US maker of cooldrinks and snack foods PepsiCo has had its eye on the southern African consumer market for decades. Its effort to build a base in South Africa after 1994 ended in disaster and the company abandoned its effort to build a distribution network from scratch. The acquisition of Pioneer Foods, a giant in the local fast-moving consumer goods industry, offered it the perfect opportunity to enter the African market.
The Covid-19 pandemic and the lockdown measures adopted by South Africa and other countries brought many prospective mergers and acquisitions to a grinding halt as management concentrated on navigating their businesses through the crisis.
Deals that sneaked in ahead of the pandemic include Distell’s sale of Plaisir de Merle and Alto wine estates and Tiso Blackstar’s sale of Gallo Music to Lebashe Investment Group’s Arena Holdings for R75-million.
Where deals went ahead, often the terms were reassessed, with buyers concerned that earnings had been negatively affected by the economic turmoil. Tongaat’s sale of its starch business to a Barloworld subsidiary for R5.35-billion was an example. Although announced in February, the deal only went ahead in October after Barloworld satisfied itself that earnings had not been materially damaged.
The second wave of deals, which is gaining momentum, involves those where companies seek to bolster liquidity, or where international and local private equity players identify new opportunities for acquisitions arising out of the turmoil.
Both Aspen and Sasol sold some of the family silver to manage debt levels. In Aspen’s case, it sold the rights to its European thrombosis business to US pharmaceutical company Mylan for almost R12.82-billion in a deal that is likely to be value accretive.
Negotiating and concluding these deals entirely via Zoom meetings has introduced a new, more complex, dimension to dealmaking that often goes unnoticed.
With lenders starting to circle, debt-laden chemicals and energy group Sasol had no option but to sell 50% of its Lake Charles Chemical Project to LyondellBasell for R33-billion.
The bargains of the century include the sale in February of the somewhat neglected CNA chain by Edcon as it attempted its (now failed) journey back to financial health. The chain’s 167 stores were purchased lock, stock and barrel by the former CEO of Exclusive Books Benjamin Trisk and a consortium led by Astoria Investments.
Devastated by the Covid-19 lockdowns, Edcon was forced into a firesale of other assets. In July, TFG agreed to acquire 382 viable Jet stores and other selected Jet assets for R480-million.
Another opportunistic investment was Mr Price’s recent acquisition of Power Fashions, a value-oriented family-owned retailer with 170 stores across southern Africa.
The year also saw considerable introspection and portfolio rationalisation, resulting in asset manager Ninety One selling its local administration firm Silica to global wealth management platform FNZ, while MTN realised some capital through the sale of its 18.5% interest in Nigerian e-commerce firm Jumia.
The year had its share of delistings too, with property companies Intu and Grit Real Estate, and mining company Assore, leading the charge. Afrox will also delist after its German parent, the Linde Group, extended an offer to all the holders of Afrox’s shares that it doesn’t already own.
Outside of Sasol, the biggest deal of the year was the $1.7-billion (R26-billion) purchase of local food company Pioneer Foods by US giant PepsiCo, which was given the go-ahead by the Competition Tribunal in March, making PepsiCo’s return to South Africa official after its abortive efforts after 1994.
PepsiCo’s July offer of R110 a share was more than 50% of the value of Pioneer Foods’ shares in the month preceding the offer.
The deal also included a BBBEE ownership plan that will see R1.6-billion worth of PepsiCo stock issued to a local broad-based workers’ trust. This holding will be unencumbered and will allow for immediately realisable dividends. The stock in PepsiCo must, after five years, be converted into a direct shareholding in Pioneer of up to 13%.
Known for brands such as Weet-Bix, Liqui Fruit, White Star and Bokomo Corn Flakes, Pioneer has a massive distribution network throughout South Africa and across southern Africa. This type of retail influence is exactly what appeals to PepsiCo, whose brands include Gatorade, Quaker Foods, Ruffles and, of course, Pepsi.
At the time of the deal, PepsiCo CEO and chairman Ramon Laguarta said Pioneer Foods represents a “differentiated opportunity” for PepsiCo and allows the company to immediately scale its business in the region.
Like Walmart, which acquired 51% of Massmart in 2011, the acquisition is premised on its ability to provide a platform for growth in South Africa and southern Africa. Aside from establishing South Africa as its regional headquarters, PepsiCo committed to investing R5.5-billion over five years to develop the overall operations of Pioneer Foods.
It seems likely that these efforts will be slightly delayed due to the disruptions of the pandemic and subsequent lockdowns. There is no doubt that 2021 will be an interesting year.
For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.
Sources: [1], [2]. Image sources: [1], [2].