The issue of voting rights by South African employees in a proposed $1.55 billion merger between the United States (US) food and beverage company, PepsiCo, and Pioneer Foods, came under the spotlight on Thursday in a Competition Tribunal hearing.
The merging parties have put forward a proposal which would see employees benefit from a share scheme to be set up by the company, and earn dividends. It is said that the Workers Trust may sell the PepsiCo shares after five years and buy shares in the local company.
On behalf the the Department of Trade and Industry, Advocate Paul McNally stated the minister was initially concerned about the factors of BEE ownership in an offshore company as well as the protection of minority shareholders.
“The minister is satisfied that there are certain enhancements, one of the major enhancements being the shareholding that is offered in terms of the proposal of unencumbered shareholding,” said McNally.
Shareholders of Pioneer Foods, which owns Sasko, White Star, Weet-Bix and Liqui-Fruit, have already approved the proposed merger, which is said to be the biggest investment by PepsiCo outside the US.
PepsiCo, the makers of Pepsi, Lays, Doritos and Gatorade, in 2019 offered R110($7) per share – a premium of around 56% – to acquire Pioneer. The proposed transaction is part of the New York-headquartered firm’s expansion in sub-Saharan Africa.
The Competition Commission recommended that the Tribunal approve the merger, subject to several public interest commitments including a moratorium on retrenchments for a certain period, as well as the creation of jobs at the merged entity.
Pioneer’s acquisition will be effected through PepsiCo’s South African subsidiary, Simba. The investment, including participation in a share scheme, has been welcomed by the Food and Allied Workers Union (FAWU), who believe that it would encourage greater productivity among employees.
“If implemented correctly, this is likely to be a best deal for the employees. It not only about paying salaries, but ownership of the company as well,” said FAWU Deputy General Secretary Mayoyo Mngomezulu.
The two companies had earlier mentioned that they hope to conclude the deal in the first quarter of 2020.