Sector News

Ajinomoto, PepsiCo vying to buy into Africa's Promasidor – sources

November 2, 2016
Food & Drink

Japan’s Ajinomoto and PepsiCo are among bidders seeking to buy a stake in African dairy and drinks company Promasidor in a deal that would give them access to its distribution network across the continent, sources told Reuters.

A deal could value Promasidor at roughly $1 billion, said the sources. The interest from the Japanese food maker and U.S. drinks giant shows how multinationals based in mature markets are looking abroad for growth and betting that Africa’s expanding middle classes will buy more packaged food and drinks.

The deal could be announced as soon as this week, according to the several sources familiar with the matter, who declined to be named as the talks are confidential.

A third bidder is involved in the process, said two of the sources, but its identity was not immediately clear. Ajinomoto was seen as more likely to clinch a deal than PepsiCo.

One of the sources said the deal was for a third of South Africa-based Promasidor, which sells Cowbell milk, Top Tea and Yumvita infant cereal. That would mean an investment of more than $300 million, based on valuations in the sector and Promasidor’s estimated earnings before interest, tax, depreciation and amortisation (EBITDA) of about $100 million.

Promasidor and PepsiCo declined to comment, while Ajinomoto could not be reached outside Japanese business hours.

The owners of Promasidor are looking for an investment from an industry player that would benefit from selling its own products through Promasidor’s distribution network in more than 30 African countries, the sources said.

Ajinomoto, which sells MSG and other seasonings as well as frozen foods, has been vocal about its international ambitions, as its home market of Japan suffers due to an aging population and a faltering economy. Its president told Reuters last year that it could spend up to $1.7 billion by the end of 2016 on deals to help it become a top-10 global food maker.

AFRICAN DEALS

Promasidor was founded in 1979 by Robert Rose, who left Britain in 1957. He began selling milk powder in small, affordable sachets in Democratic Republic of Congo and the company has since grown to include a range of brands, with a strong presence in West Africa and growing business in East and Southern Africa.

Investment fund Tana Africa Capital – founded by E. Oppenheimer & Son and Singapore’s sovereign wealth fund Temasek – owns a minority stake in the company and is looking to exit, according to three of the sources.

The source who said the deal was for 33 percent of the Promasidor added that this comprised a 25 percent stake owned by Tana and the rest from some members of the founding Rose family who want to cash out of the business.

Promasidor is being advised by Nomura, according to the sources. Ajinomoto is being advised by Goldman Sachs while PepsiCo is being advised by UBS, according to one of the sources.

Tana, Nomura, Goldman and UBS all declined to comment.

Africa’s food and drink market has seen several deals in recent years. Coca-Cola invested in Nigerian drinks firm Chi Ltd in January, Kellogg bought a stake in Nigerian food company Multipro last year, and Danone has made several stake acquisitions in Africa over the past three years.

By Martinne Geller, Sophie Sassard and Lauren Hirsch

Source: Reutes via euronews

comments closed

Related News

May 21, 2022

Cécile Béliot becomes Bel Group CEO

Food & Drink

Cécile Béliot has assumed the role of Bel Group chief executive officer, following the decision to separate the roles of chairman and CEO. The separation of the functions will enable Bel Group to develop in three areas of healthy snacking. Meanwhile, the company’s former CEO, Antoine Fiévet, has had his mandate renewed as chairman of the board.

May 21, 2022

“Corporate greed and dereliction of duty”: FDA commissioner slammed over infant formula shortage

Food & Drink

US Food and Drug Administration (FDA) Commissioner Dr. Robert Califf was grilled by lawmakers during a House Appropriations subcommittee hearing, where he was slammed over the agency’s handling of the escalating infant formula shortage.

May 21, 2022

Sweegen hails antioxidants and bitter blocking tech a turning point for sugar reduction and healthy aging

Food & Drink

Sweegen is ramping up its efforts to reduce sugar across F&B applications while simultaneously tapping into the benefits of using antioxidants and bitter blocking technology. Speaking to FoodIngredientsFirst, Casey McCormick, vice president of global innovation at Sweegen, says product developers can find a broad range of solutions in Sweegen’s nature-based sweetener systems as brands elevate better-for-you foods.