Exclusive: Ajinomoto, PepsiCo vying to buy into Africa's Promasidor - sources

Tue Nov 1, 2016 2:02pm EDT
 
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By Martinne Geller, Sophie Sassard and Lauren Hirsch

LONDON/NEW YORK (Reuters) - Japan's Ajinomoto (2802.T: Quote) and PepsiCo (PEP.N: Quote) 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.   Continued...

 
Packs of Ajinomoto Co's Hon-Dashi, or bonito base seasoning, are conveyed on its packaging line at the company's Kawasaki factory in Kawasaki, south of Tokyo, Japan, June 29, 2015. . Picture taken June 29, 2015. REUTERS/Yuya Shino