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Firm Intention Announcement
PIONEER FOOD GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1996/017676/06)
Share code: PFG
ISIN: ZAE000118279
("Pioneer Foods" or "the Company")
PEPSICO INC
(Incorporated in the United States of America)
("PepsiCo")
SIMBA PROPRIETARY LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1995/003667/07)
("the PepsiCo Offeror")
JOINT ANNOUNCEMENT OF THE FIRM INTENTION OF A WHOLLY-OWNED SUBSIDIARY
OF PEPSICO TO MAKE AN OFFER TO ACQUIRE THE ORDINARY SHARES IN PIONEER FOODS, BY WAY OF A
SCHEME OF ARRANGEMENT OR STANDBY OFFER
1. INTRODUCTION
1.1. Shareholders of Pioneer Foods are hereby advised that Pioneer Foods and PepsiCo have
entered into a transaction implementation agreement ("Implementation Agreement")
pursuant to which the PepsiCo Offeror, a wholly-owned subsidiary of PepsiCo, has
delivered notice to Pioneer Foods of its firm intention to make an offer ("PepsiCo Offer")
to acquire the issued ordinary shares of Pioneer Foods ("Pioneer Foods Ordinary
Shares") from the holders of Pioneer Foods Ordinary Shares ("Pioneer Foods Ordinary
Shareholders"). The PepsiCo Offer will be made at a cash consideration of ZAR110
("Base Price") per Pioneer Foods Ordinary Share with certain possible increases to the
Base Price linked to dividend(s) (the detail of which is set out in paragraph 2.2.4 below).
1.2. The Base Price represents a premium of 56.5% to the 30-day volume weighted average
traded price of Pioneer Foods Ordinary Shares of ZAR70.31, as at 12 July 2019, being
the last trading date prior to the date on which the cautionary announcement was
published on SENS.
1.3. The independent board, established by Pioneer Foods in relation to the PepsiCo Offer,
which comprises Messrs NW Thomson, SS Ntsaluba and LE Mthimunye, ("Independent
Board"), unanimously recommends the PepsiCo Offer to Pioneer Foods Ordinary
Shareholders, the Pioneer Foods Class A Share Comparable Offer (as defined below) to
the holder ("Class A Shareholder") of Pioneer Foods' class A shares ("Class A Shares"),
the PSR Comparable Offer (as defined below) to the PSR Holders (as defined below),
and the BEE Trust Repurchase (as defined below). In this announcement, Pioneer Foods
Ordinary Shareholders and the Class A Shareholders are collectively referred to as the
"Pioneer Foods Shareholders".
1.4. Pioneer Foods Ordinary Shareholders collectively holding 52.85% of the aggregate of the
issued Pioneer Foods Ordinary Shares and Class A Shares (excluding those held by
subsidiaries of Pioneer Foods) ("Scheme Voting Shares"), including Zeder Investments
Limited, have furnished irrevocable undertakings to vote in favour of or accept the
PepsiCo Offer.
2. THE PEPSICO OFFER AND CONSIDERATION
2.1. The PepsiCo Offer will be implemented by way of a single offer comprising:
2.1.1. a scheme of arrangement ("Scheme") in terms of section 114 of the Companies
Act 71 of 2008 ("Companies Act"), to be proposed by the Pioneer Foods board
of directors ("Pioneer Foods Board") between Pioneer Foods and Pioneer Foods
Ordinary Shareholders, other than subsidiaries of Pioneer Foods holding Pioneer
Foods Ordinary Shares ("Excluded Shareholders"), at the Per Share Scheme
Consideration (as defined below) and upon the terms and subject to the conditions
set out in the circular to be distributed to Pioneer Foods Shareholders in due
course ("Circular"); and
2.1.2. if, inter alia, after the Scheme is proposed, the Pioneer Foods general meeting to
consider the Scheme is cancelled by Pioneer Foods or is not held for any reason,
or court approval is required but not obtained, or any condition precedent to the
Scheme is not fulfilled and, where applicable, not waived, or the Scheme otherwise
fails, a general offer to Pioneer Foods Ordinary Shareholders (including the
Excluded Shareholders) ("Standby Offer") at the Per Share Scheme
Consideration (as defined below) and upon the terms and subject to the conditions
set out in the Circular.
2.2. In this announcement, the:
2.2.1. Pioneer Foods Ordinary Shares forming the subject matter of the PepsiCo Offer
are collectively referred to as the "Scheme Shares";
2.2.2. holders of the Scheme Shares are referred to as the "Scheme Participants"; and
2.2.3. PepsiCo Offer, the BEE Payment (as defined below), the BEE Trust Repurchase
(as defined below) and the discharge by the PepsiCo Offeror of its obligations to
make the Pioneer Foods Class A Share Comparable Offer (as defined below) and
the PSR Comparable Offer (as defined below) are collectively referred to as the
"Transaction".
2.2.4. The cash consideration payable for each Scheme Share ("Per Share Scheme
Consideration") will be calculated in accordance with the following formula:
A = ZAR110 (one hundred and ten Rand) plus B plus C minus D
where:
A = the Per Share Scheme Consideration (expressed in Rand);
B = if implementation of the Scheme ("Scheme Implementation Date") occurs
after 30 September 2019, the amount per Pioneer Foods Ordinary Share
(expressed in Rand) of the final cash distribution for the Pioneer Foods
financial year ending 30 September 2019, but only if and to the extent that both
(i) the final cash distribution is declared by Pioneer Foods after 30 September 2019,
but prior to the Scheme Implementation Date and (ii) the entitlement to such cash
distribution vests in persons who are holders of Pioneer Foods Ordinary Shares
as at a dividend participation record date which is on or after the
Scheme Implementation Date, provided that the maximum amount of B will be
a total amount of ZAR2.19 (two Rand and nineteen cents) per Pioneer Foods Ordinary Share;
C = if the Scheme Implementation Date is after 31 March 2020, either:
(i) if the interim cash distribution for the 6 (six) month period ending 31
March 2020 has been declared prior to the Scheme Implementation Date,
the amount per Pioneer Foods Ordinary Share (expressed in Rand) of that
interim cash distribution, but only if and to the extent that the entitlement to
such cash distribution vests in persons who are holders of Pioneer Foods
Ordinary Shares as at a dividend participation record date which is on or
after the Scheme Implementation Date; or
(ii) if the interim Cash Distribution for the 6 (six) month period ending 31
March 2020 has not been declared prior to the Scheme Implementation
Date, an amount of ZAR1.05 (one Rand and five cents);
provided that the maximum amount of C will be ZAR1.05 (one Rand and five
cents);
D = the total amount (expressed in Rand) of any Extraordinary Distributions (as defined below) per
Pioneer Foods Ordinary Share which are declared by Pioneer Foods prior
to the Scheme Implementation Date, and which have been paid or are
payable to persons who are holders of Pioneer Foods Ordinary Shares as
at a date prior to the Scheme Implementation Date.
2.2.5. For purposes of D above, an "Extraordinary Distribution" is any of the following:
2.2.5.1. a cash distribution (irrespective of the amount thereof) declared,
distributed and/or paid by Pioneer Foods on Pioneer Foods Ordinary
Shares which does not coincide with, or approximate, in respect of date,
either the annual final dividend or the interim dividend declared by
Pioneer Foods on Pioneer Foods Ordinary Shares for the Pioneer
Foods financial year ending 30 September 2018 or the 6 (six) month
period ending 31 March 2019 (respectively);
2.2.5.2. the amount/s by which an annual final cash distribution declared,
distributed and/or paid by Pioneer Foods for the Pioneer Foods financial
year ending 30 September 2019 exceeds a total amount of ZAR2.19
(two Rand and nineteen cents) per Pioneer Foods Ordinary Share; or
2.2.5.3. the amount/s by which any interim cash distribution declared, distributed
and/or paid by Pioneer Foods for the 6 (six) month period ending
31 March 2020 exceeds a total amount of ZAR1.05 (one Rand and five
cents) per Pioneer Foods Ordinary Share.
3. OVERVIEW OF PEPSICO
PepsiCo is incorporated in the State of North Carolina with its executive offices located
in Purchase, New York. It is one of the world's leading food and drink companies and
has a global portfolio of diverse products and brands (see http://www.pepsico.com/).
Through its own operations, authorized bottlers, contract manufacturers and other third
parties, PepsiCo makes, markets, distributes and sells a wide variety of convenient
beverages, foods and snacks, serving customers and consumers in more than 200
countries and territories. PepsiCo consists of six divisions which manufacture, distribute
and sell a variety of food and beverages. PepsiCo's product portfolios consist of snacks,
juices, grains and beverages and are represented in South Africa by brands such as
Simba, Nik Naks, Lays, Doritos, Pepsi and 7UP.
4. RATIONALE AND BENEFITS OF THE TRANSACTION
4.1. Rationale for PepsiCo
4.1.1. PepsiCo believes Africa is a key market for future growth. A meaningful portion of
PepsiCo's existing portfolio is in developing and emerging markets where further
expansion is a high priority for PepsiCo. Africa is an important component in
PepsiCo's expansion strategy due to its attractive macro-economic prospects and
the relative affordability and value positioning of many of PepsiCo's products.
4.1.2. PepsiCo's existing portfolio, with its broad nutritional offerings, can provide many
benefits to both the South African and broader African consumer. Acquiring
Pioneer Foods will increase PepsiCo's presence in a country and region of high
growth potential.
4.1.3. PepsiCo is confident that Pioneer Foods represents a uniquely attractive
investment opportunity and is closely aligned with key pillars of PepsiCo's long-
term strategic plan. Together, the two groups' respective product portfolios,
geographic presence, and capabilities have the potential to create an exciting
opportunity for future business in the region.
4.1.4. Pioneer Foods' portfolio of strong and locally relevant brands complements
PepsiCo's existing presence in the country and enables PepsiCo to offer a broad
set of consumption choices for consumers.
4.1.5. PepsiCo brings extensive category knowledge and global capabilities, such as
marketing and research and development, which it intends to use to further drive
growth in Pioneer Foods' portfolio and develop products tailored to local consumer
preferences.
4.1.6. Pioneer Foods' manufacturing and go-to-market capabilities will expand
penetration of PepsiCo's products to South African consumers. Pioneer Foods
forms an important part of PepsiCo's strategy to expand not only in South Africa
but in Sub-Saharan Africa as well.
4.1.7. Each of PepsiCo and Pioneer Foods has an experienced management team with
a wide knowledge of African markets and a deep talent pool that can successfully
implement the shared vision.
4.2. Benefits for South Africa
4.2.1. The Transaction is one of PepsiCo's largest acquisitions outside of the United
States, which is a demonstration of PepsiCo's belief in South Africa's potential and
its long-term commitment to the country.
4.2.2. In the face of a challenging global and domestic economic environment, the
Transaction represents a vote of confidence in the South African economy. The
foreign direct investment which will result from the implementation of the
Transaction will contribute meaningfully to the growth of the South African
economy under its newly elected leadership. The Transaction could also help
attract further foreign direct investment and reinforces the case that South Africa
is an attractive destination for multinationals.
4.2.3. PepsiCo intends to use South Africa as a hub for expansion throughout Africa.
This will require investment to support the business and develop capabilities in the
country, which will benefit local communities in a variety of ways and will support
broad socio-economic imperatives around employment and benefiting local
suppliers.
4.2.4. PepsiCo is committed to investing in the development of its employees (including
those of Pioneer Foods). As PepsiCo employs more people to drive growth in
Africa, it will provide training that will result in a significant transfer of skills and
knowledge to the workforce in South Africa. PepsiCo also expects to bring to South
Africa its global capabilities, such as procurement and research and development,
which will further enhance the pool of skilled labour.
4.2.5. Through PepsiCo's global footprint, Pioneer Foods will have access to new
markets. This will improve Pioneer Foods' ability to compete more effectively on
the African continent and beyond.
4.2.6. Pioneer Foods' socially accountable behaviour will be further enhanced by
PepsiCo's vision of "Winning with Purpose", a framework for accelerated,
sustainable growth that emphasises integrating sustainability into its business
strategy and leaving a positive imprint on society and the environment.
4.2.7. PepsiCo's commitment to next generation agriculture, especially its Sustainable
Farming Program ("SFP"), will help create new opportunities for South Africans
throughout the nation's agricultural supply chain. PepsiCo's business around the
world is rooted in agriculture, with over 25 crops sourced from thousands of
farmers in more than 60 countries. PepsiCo will use its scale and reach to advance
local knowledge of agronomy, efficient fertilizer and water use, and plant protection
techniques boosting yields, improving livelihoods, and preserving precious natural
resources. PepsiCo has also begun working with partners to examine how to boost
female engagement with its SFP, and how PepsiCo can do even more to help
smallholder farmers improve farming practices and livelihoods.
4.2.8. PepsiCo's commitment to optimizing farming practices will help reduce water use
in one of the most high-water-risk regions in the world, while also helping to
proactively mitigate the impact of climate change. For example, PepsiCo is
currently piloting the adoption of the Alliance for Water Stewardship Standard at
its Parow facility. Through this pilot, it will harness ongoing efforts to improve water
use efficiency across its value chain and replenish water back to its source
watershed. At the same time, PepsiCo is working with farmers in other regions to
install efficient, solar powered, drip irrigation systems that increase yield whilst
reducing water use. PepsiCo is also testing tools that allow farmers to quantify on-
farm greenhouse gas emissions, enabling them to improve the climate impact of
the farm, increase soil quality, and support local biodiversity.
4.3. Rationale for Pioneer Foods
4.3.1. As part of PepsiCo, Pioneer Foods will gain access to leading research and development and brand
expertise, along with global scale and distribution.
4.3.2. Pioneer Foods will be able to drive growth by leveraging PepsiCo's global research and development
and brand expertise, geographic footprint and distribution network. This will allow
Pioneer Foods to enter new categories, develop new products within existing
categories, improve local brand building and strengthen its go-to-market model.
4.3.3. Pioneer Foods will have access to PepsiCo's brand portfolio for Africa, including
Simba, Doritos, Nik-Naks, as well as PepsiCo's bottling network, boosting local
presence and go-to-market capability.
4.3.4. In addition, the Transaction will provide Pioneer Foods Ordinary Shareholders with
an opportunity to dispose of their Scheme Shares for cash at a substantial
premium and with manageable transaction risk. Accordingly, the Independent
Board believes that it is in the interests of Pioneer Foods and the Pioneer Foods
Shareholders that they be given an opportunity to consider the PepsiCo Offer.
5. OVERVIEW AND EFFECTS OF THE SCHEME
5.1. The Scheme will constitute an "affected transaction" as defined in section 117(1)(c) of
the Companies Act. It will be implemented in accordance with the Companies Act and
the Companies Regulations, 2011 ("Companies Regulations") and will be regulated by
the Takeover Regulation Panel ("TRP").
5.2. In terms of the Scheme, the PepsiCo Offeror will acquire the Scheme Shares from the
Scheme Participants for the Per Share Scheme Consideration, whereupon Pioneer
Foods will become a subsidiary of the PepsiCo Offeror.
5.3. Subject to the Scheme becoming unconditional:
5.3.1. the Scheme Participants (whether they voted in favour of the Scheme or not, or
abstained or refrained from voting) will be deemed to have disposed of their
Scheme Shares (including all rights, interests and benefits attaching thereto), free
of encumbrances, to the PepsiCo Offeror on the Scheme Implementation Date in
exchange for the Per Share Scheme Consideration and the PepsiCo Offeror will
be deemed to have acquired registered and beneficial ownership, free of
encumbrances, of all the Scheme Shares as of the Scheme Implementation Date;
5.3.2. the disposal and transfer by each Scheme Participant of the Scheme Shares held
by such Scheme Participant to the PepsiCo Offeror and the acquisition of
ownership of these Scheme Shares by the PepsiCo Offeror pursuant to the
provisions of the Scheme shall be effected on the Scheme Implementation Date;
5.3.3. each Scheme Participant will be deemed to have transferred to the PepsiCo
Offeror, on the Scheme Implementation Date, all of the Scheme Shares held by
such Scheme Participant, without any further act or instrument being required; and
5.3.4. Scheme Participants will be entitled to receive the Per Share Scheme
Consideration.
6. THE SCHEME CONDITIONS
6.1. The Scheme is subject to the fulfilment or waiver, as applicable, of the following
conditions ("Conditions"):
6.1.1. by no later than 30 July 2019, all agreements in respect of the Transaction
("Transaction Agreements") are signed;
6.1.2. either:
6.1.2.1. no Pioneer Foods Shareholder both (i) gives notice objecting to all or any of the
special resolutions to be proposed to Pioneer Foods Ordinary Shareholders
and Class A Shareholders to approve the Scheme ("Scheme Resolutions"),
the special resolution to be proposed to Pioneer Foods Shareholders to
approve the repurchase of the Class A Shares (as described in paragraph 8
below) ("Pioneer Foods Class A Repurchase Resolution") and/or the special
resolution to be proposed to Pioneer Foods Shareholders to approve the
repurchase by Pioneer Foods of the BEE Trust Repurchase Shares (as defined
in paragraph 10 below) and the BEE Trust Residual Repurchase Shares (as
defined in paragraph 10 below) ("BEE Trust Repurchase"), as described in
paragraph 10 below ("BEE Trust Repurchase Resolution"), as contemplated
in section 164(3) of the Companies Act and (ii) votes against all or any of those
resolutions at the general meeting of Pioneer Foods Shareholders convened to
consider and approve those resolutions ("General Meeting"); or
6.1.2.2. if any Pioneer Foods Shareholder gives notice objecting to all or any of the
Scheme Resolutions, the Pioneer Foods Class A Repurchase Resolution
and/or the BEE Trust Repurchase Resolution as contemplated in section
164(3) of the Companies Act and then votes against all or any of the Scheme
Resolutions, the Pioneer Foods Class A Repurchase Resolution and/or the
BEE Trust Repurchase Resolution at the General Meeting, Pioneer Foods
Shareholders holding no more than 5% (five per cent) of all of the issued
Pioneer Foods Shares give such notice and vote against all or any of the
Scheme Resolutions, the Pioneer Foods Class A Repurchase Resolution
and/or the BEE Trust Repurchase Resolution at the General Meeting; or
6.1.2.3. if any Pioneer Foods Shareholder gives notice objecting to all or any of the
Scheme Resolutions, the Pioneer Foods Class A Repurchase Resolution
and/or the BEE Trust Repurchase Resolution as contemplated in section
164(3) of the Companies Act and then votes against all or any of the Scheme
Resolutions, the Pioneer Foods Class A Repurchase Resolution and/or the
BEE Trust Repurchase Resolution at the General Meeting in respect of more
than 5% (five per cent) of all of the issued Pioneer Foods Shares, such
shareholders exercise their rights afforded to them in terms of section 164 of
the Companies Act ("Appraisal Rights"), by giving valid demands in terms of
sections 164(5) to 164(8) of the Companies Act, in respect of no more than 5%
(five per cent) of all of the issued Pioneer Foods Shares within the maximum
period permitted by the Companies Act;
6.1.3. by no later than 30 July 2019, BDO Corporate Finance Proprietary Limited, in its
capacity as independent expert ("Independent Expert") appointed by the
Independent Board provides (i) a "fair and reasonable" opinion in relation to each of
the Scheme, the Pioneer Foods Class A Share Comparable Offer (as described in
paragraph 8 below) and the PSR Comparable Offer (as described in paragraph 9
below) as required by the Takeover Regulations, confirming that each of the Per
Share Scheme Consideration, the Per Class A Share Comparable Offer
Consideration (as defined below) and the Per PSR Holder Comparable Offer
Consideration (as defined below) are fair and reasonable to the Pioneer Foods Ordinary
Shareholders, the Class A Shareholders, and the PSR Holders (as defined below),
as the case may be, and (ii) the reports required under section 114 (read with sections
48(8) and 113) of the Companies Act;
6.1.4. by no later than 30 November 2019, each of the Scheme Resolutions is approved by
the requisite majority of votes as contemplated in section 115(2) of the Companies
Act;
6.1.5. by no later than 30 November 2019, the following resolutions are approved by the
requisite majority of votes of the Pioneer Foods Shareholders:
6.1.5.1. the BEE Trust Repurchase Resolution, as required by section 5.69 of the Listing
Requirements of the JSE ("JSE Listings Requirements") (and, if applicable,
section 48(8) of the Companies Act);
6.1.5.2. the Pioneer Foods Class A Repurchase Resolution, as required by section 5.69
of the JSE Listings Requirements and section 48(8) of the Companies Act;
6.1.5.3. the ordinary resolution to be proposed to Pioneer Foods Shareholders at the
General Meeting seeking their approval of the determination pursuant to the
Phantom Share Plan (as defined below) referred to in paragraph 9.2.1 ("PSR
Amendment Resolution"); and
6.1.5.4. the ordinary resolution to be proposed to Pioneer Foods Shareholders at the
General Meeting seeking their approval for the BEE Payment (as defined
below);
6.1.6. by no later than 30 June 2020, to the extent required in terms of the Companies Act,
the High Court of South Africa ("Court") approves the implementation of the Scheme
Resolutions, the Pioneer Foods Class A Repurchase Resolution and/or the BEE
Trust Repurchase Resolution, as the case may be;
6.1.7. if any person who voted against the Scheme Resolutions, the Pioneer Foods Class
A Repurchase Resolution and/or the BEE Trust Repurchase Resolution applies to
Court for a review of the Scheme, the Class A Repurchase and/or the BEE Trust
Repurchase in terms of section 115(3)(b) and section 115(6) of the Companies Act,
either:
6.1.7.1. leave to apply to Court for any such review is refused; or
6.1.7.2. if leave is so granted, the Court refuses to set aside the Scheme Resolutions,
the Class A Repurchase Resolution and/or the BEE Trust Repurchase
Resolution, as the case may be;
6.1.8. by no later than 30 November 2019, the special resolution ("Zeder Disposal
Resolution") of holders of Zeder Investments Limited ("Zeder") ordinary shares
("Zeder Shareholders") in terms of sections 112 and 115 of the Companies Act (and
for purposes of section 9 of the JSE Listings Requirements) to approve the sale and
transfer by Zeder of the Pioneer Foods Ordinary Shares beneficially owned by Zeder
and/or Zeder Financial Services Limited ("Zeder Disposal"), is approved by the
requisite majority of the votes of the Zeder Shareholders at the general meeting of
Zeder Shareholders, as contemplated in section 115(2) of the Companies Act;
6.1.9. if Zeder Shareholders holding more than 15% (fifteen per cent) of all of the issued
Zeder shares
6.1.9.1. give notice objecting to the Zeder Disposal Resolution as contemplated in
section 164(3) of the Companies Act; and
6.1.9.2. then vote against the Zeder Disposal Resolution at the Zeder meeting; and
6.1.9.3. then exercise their appraisal rights, by giving valid demands in terms of sections
164(5) to 164(8) of the Companies Act within the maximum period permitted by
the Companies Act; and
Zeder has delivered by 31 January 2020 a written notice to PepsiCo advising that the
condition relating to appraisal rights of Zeder Shareholders in the irrevocable
undertaking referred to below has been waived in accordance with the provisions of
such irrevocable undertaking;
6.1.10. by no later than 30 June 2020 to the extent Court approval is required by the
Companies Act, the Court approves the implementation of the Zeder Disposal
Resolution pursuant to section 115 of the Companies Act;
6.1.11. by no later than 30 June 2020 the counterparties to certain material agreements
which contain change of control provisions (as will be detailed in the Circular)
("Change of Control Agreements") irrevocably and unconditionally (or conditionally
on terms acceptable to PepsiCo) agree in writing in favour of Pioneer Foods and the
relevant member of the Pioneer Foods group to irrevocably and unconditionally waive
the rights (howsoever arising) which arise or might arise directly or indirectly under
or pursuant to the Change of Control Agreement directly or indirectly by reason of the
entry into and/or implementation of the Transaction, including without limitation rights
(howsoever arising) to amend, cancel or terminate the Change of Control
Agreements or to acquire or dispose of shares or other assets;
6.1.12. by no later than 30 June 2020, all regulatory approvals required to implement the
Transaction and the Zeder Disposal are obtained, including:
6.1.12.1. the TRP issuing compliance certificates to each of Pioneer Foods and Zeder
with respect to the Transaction and the Zeder Disposal, respectively, in terms
of section 121(b) of the Companies Act;
6.1.12.2. the relevant competition authorities (to be detailed in the Circular) granting such
approvals as are required in terms of the Competition Act, No. 89 of 1998 and
other applicable laws to implement the Transaction, either unconditionally, or
subject to conditions acceptable to PepsiCo;
6.1.12.3. the Financial Surveillance Department of the South African Reserve Bank
granting such approvals with respect to the Transaction and any financing
arrangements relating thereto, as are required in terms of the South African
Exchange Control Regulations (promulgated in terms of the South African
Currency and Exchanges Act No. 9 of 1933) to implement the Transaction and
the Zeder Disposal, either unconditionally, or subject to conditions acceptable
to PepsiCo;
6.1.12.4. the JSE grants such approval as are required in terms of the JSE Listings
Requirements with respect to the Transaction and the Zeder Disposal;
6.1.13. no Pioneer Foods Group Material Adverse Event (as detailed in the Circular) occurs
during the period from the date of signature of the Implementation Agreement up to
the date on which all the Conditions, other than those in this paragraph 6.1.13 and
paragraphs 6.1.12.1 and 6.1.14 are fulfilled or, where applicable, waived (both dates
inclusive); and
6.1.14. by no later than the date on which the Condition in paragraph 6.1.13 is regarded as
having been fulfilled, the Implementation Agreement is not terminated in accordance
with its terms.
6.2. PepsiCo and Pioneer Foods shall use their reasonable endeavours to procure the
fulfilment of the Conditions as soon as reasonably practicable.
6.3. PepsiCo is entitled, in its sole and exclusive discretion, by notice in writing delivered to
Pioneer Foods, to waive, in whole or in part, all or any of the Conditions in:
6.3.1. paragraph 6.1.2, 6.1.5 (each individually), 6.1.8, 6.1.9, 6.1.10, 6.1.11, 6.1.12.2 (in
certain respects) and 6.1.13; and/or
6.3.2. paragraph 6.1.6 and/or 6.1.7, if the waiver relates to the Pioneer Foods Class A
Repurchase Resolution and/or the BEE Trust Repurchase Resolution.
6.4. PepsiCo and Pioneer Foods shall be entitled to waive paragraph 6.1.1 if agreed in writing
by the parties. Save for the aforementioned, as provided in paragraph 6.3, neither
PepsiCo nor Pioneer Foods may waive any Condition unless that waiver is agreed to in
writing by both Pioneer Foods and PepsiCo and is permissible in law.
6.5. PepsiCo shall be entitled, on one or more occasions, by notice in writing delivered to
Pioneer Foods to extend the outside date for fulfilment of Conditions; provided that
extension(s) in respect of:
6.5.1. the Conditions in clauses 6.1.4, 6.1.5, and/or 6.1.8 beyond 30 November 2019 will
require the written agreement of Pioneer Foods and PepsiCo; and
6.5.2. any Conditions beyond 30 June 2020 will require the written agreement of Pioneer
Foods and PepsiCo;
7. Funding and Cash Confirmation
7.1. The Per Share Scheme Consideration will be funded by PepsiCo from a combination of
debt and cash.
7.2. The PepsiCo Offeror has furnished the TRP with an irrevocable unconditional guarantee
issued by JPMorgan Chase Bank, N.A., Johannesburg Branch ("JPM"), in accordance
with regulation 111(4)(a) of the Companies Regulations, in which JPM has agreed to
pay up to a maximum guaranteed amount equal to R25 400 000 000 (twenty five billion,
four hundred million Rand), in relation to:
7.2.1. the Per Share Scheme Consideration payable to all participants in the PepsiCo Offer;
7.2.2. the Per Class A Share Comparable Offer Consideration payable in terms of the
Pioneer Foods Class A Share Comparable Offer (as described in paragraph 8 below);
7.2.3. the consideration payable by Pioneer Foods for the BEE Trust Residual Repurchase
Shares (as defined in paragraph 10 below) under the BEE Trust Repurchase
Resolution; and
7.2.4. any amount payable as consideration for the cancellation of the phantom share rights
issued under the Phantom Share Plan ("Phantom Share Rights") pursuant to
paragraph 9 below,
if the PepsiCo Offeror fails to do so, pursuant to fulfilment or, where applicable, waiver
of the Conditions.
8. THE PIONEER FOODS CLASS A SHARES COMPARABLE OFFER
8.1. The Pioneer Foods Class A Shares are held by the Pioneer Foods Employee Share Trust.
8.2. In terms of (i) the rights, privileges, limitations and terms of the Pioneer Foods Class A
Shares and (ii) the trust deed of the Pioneer Foods Employee Share Trust (as amended),
the trustees of the Pioneer Foods Employee Share Trust ("EST Trustees") will be
entitled to sell the Pioneer Foods Class A Shares to Pioneer Foods or nominees of
Pioneer Foods, on terms approved by Pioneer Foods in writing.
8.3. By reason of the PepsiCo Offeror making the PepsiCo Offer, the PepsiCo Offeror will be
obliged in terms of section 125(2) of the Companies Act read with regulation 87(2) of the
Companies Regulations, to make a comparable offer ("Comparable Offer") to the
holder of the Pioneer Foods Class A Shares ("Pioneer Foods Class A Share
Comparable Offer").
8.4. In discharge of the PepsiCo Offeror's obligation to make a Comparable Offer to the
holder of the Pioneer Foods Class A Shares, the PepsiCo Offeror, Pioneer Foods and
the holder of the Pioneer Foods Class A Shares will enter into an agreement ("Pioneer
Foods Class A Share Repurchase Agreement") in terms of which the EST Trustees
will (subject to the Pioneer Foods Class A Repurchase Resolution being approved by
the Pioneer Foods Shareholders and fulfilment or, where applicable, waiver of the
Conditions):
8.4.1. agree to sell all the Pioneer Foods Class A Shares in issue on the Scheme Implementation Date:
8.4.1.1. to Pioneer Foods at a consideration per share equal to the Per Class A Share
Comparable Offer Consideration (as defined below), whereupon those Pioneer
Foods Class A Shares will be cancelled as issued shares; or
8.4.1.2. to the PepsiCo Offeror at a consideration equal to the Per Class A Share
Comparable Offer Consideration, if:
8.4.1.2.1. (i) the Pioneer Foods Class A Repurchase Resolution is not approved by the
requisite majority of votes of the Pioneer Foods Shareholders, (ii) PepsiCo
waives the Condition in paragraph 6.1.5.2 and (iii) the other Conditions are
fulfilled or, where applicable, waived; or
8.4.1.2.2. the other Conditions are fulfilled or, where applicable, waived but Pioneer
Foods is, by law, prohibited from paying the amount payable as
consideration for the Pioneer Foods Class A Share Repurchase by reason
of the requirements of sections 46 and 48 of the Companies Act in relation
to solvency and liquidity; and
8.4.1.3. irrevocably and unconditionally agree to not exercise their Appraisal Rights.
8.5. The cash consideration (expressed in Rand) (the "Per Class A Share Comparable
Offer Consideration") payable for each Pioneer Foods Class A Share in discharge of
the PepsiCo Offeror's obligation to make the Pioneer Foods Class A Share Comparable
Offer, is an amount calculated in accordance with the following formula:
D = E minus F
where:
D = the Per Class A Share Comparable Offer Consideration;
E = the Per Share Scheme Consideration; and
F = the amount as at the Scheme Implementation Date of the "Imaginary
Threshold Debt" as defined in schedule 1 to the memorandum of incorporation of
Pioneer Foods (which, for the avoidance of doubt is an amount per Pioneer Foods
Class A Share).
9. THE PSR HOLDERS
9.1. By reason of the PepsiCo Offeror making the PepsiCo Offer, the PepsiCo Offeror is
obliged in terms of the Companies Act to make a Comparable Offer to the holders of
Phantom Share Rights ("PSR Holders").
9.2. In discharge of the PepsiCo Offeror's obligation to make a Comparable Offer and subject
to fulfilment or, where applicable, waiver of each of the Conditions (the last date of such
fulfilment or, where applicable, waiver being the "Scheme Finalisation Date"):
9.2.1. the directors of Pioneer Foods (as described in the Phantom Share Plan Rules) have
made a determination in terms of the rights granted to them in the rules of the
Phantom Share Plan as amended ("Phantom Share Plan Rules") that:
9.2.1.1. all Phantom Share Rights will be deemed to be exercised, without the need for
any action on the part of the PSR Holders, on the first business day following
the Scheme Finalisation Date, at a deemed "Exercise Price" (as defined in the
Phantom Share Plan Rules) equal to the Per Share Scheme Consideration;
and
9.2.1.2. accordingly, all Pioneer Foods Ordinary Shares which are issued to PSR
Holders as a result of and in settlement of the automatic exercise, will form part
of the Scheme Shares; and
9.2.2. if (i) the PSR Amendment Resolution is not approved by the requisite majority of
Pioneer Foods Shareholders at the General Meeting, (ii) PepsiCo elects to waive the
Condition in paragraph 6.1.5.3, and (iii) the other Conditions are fulfilled or, where
applicable waived, Pioneer Foods will procure that the relevant members of the
Pioneer Foods group offer to each PSR Holder holding Phantom Share Rights on the
business day succeeding the Scheme consideration record date, the right to cancel
all of his or her Phantom Share Rights. If a PSR Holder accepts that offer within the
period permitted for acceptance, members of the Pioneer Foods group, funded by
the PepsiCo Offeror, will pay the Per PSR Holder Comparable Offer Consideration to
that PSR Holder.
9.3. The cash consideration (expressed in Rand) ("Per PSR Holder Comparable
Offer Consideration") payable to a PSR Holder in the circumstances set out in
paragraph 9.2.2 above is an amount calculated in accordance with the following formula:
J = K multiplied by L
where:
J = the Per PSR Holder Comparable Offer Consideration of that PSR Holder
K = the Per Share Scheme Consideration; and
L = the number of Pioneer Foods Ordinary Shares to which that PSR Holder
would have been entitled, applying the formula contained in clause 8.2 of
the Phantom Share Plan Rules, (i) had the relevant PSR Holder exercised
all Phantom Share Rights held by him or her on the business day
succeeding the Scheme consideration record date and (ii) had the
"Exercise Price" (as defined in the Phantom Share Plan Rules) equalled
the Per Share Scheme Consideration.
10. THE BEE TRUST REPURCHASE
10.1. In terms of the subscription agreement ("2012 BEE Subscription Agreement"), dated
13 January 2012 entered into between Pioneer Foods and The Pioneer Foods Broad-
Based BEE Trust ("BEE Trust") as part of the BEE ownership transaction implemented
by Pioneer Foods in 2012 ("2012 BEE Transaction"), as amended:
10.1.1. Pioneer Foods is entitled to exercise an option to repurchase such number of Pioneer
Foods Ordinary Shares as is calculated by applying the Repurchase Formula (as
such term is defined in the 2012 BEE Subscription Agreement) ("BEE Trust
Repurchase Shares") from the BEE Trust at par value ("BEE Trust Initial Shares")
("Pioneer Foods Repurchase Option") if:
10.1.1.1. an actual or proposed scheme of arrangement occurs during the notional
funding period; and
10.1.1.2. the BEE Trust Initial Shares will, or are, in the opinion of Pioneer Foods likely
to be, compulsorily acquired from the BEE Trust.
10.2. By reason of the proposal of the Scheme, the Pioneer Foods Board has unanimously
resolved to:
10.2.1. reduce the Lock-in Period (as defined in the 2012 BEE Subscription Agreement), and
to exercise the Pioneer Foods Repurchase Option; and
10.2.2. exercise the Pioneer Foods Repurchase Option in the addendum to the 2012 BEE Subscription
Agreement ("2012 BEE Subscription Agreement Addendum"),
subject to the approval of the BEE Trust Repurchase Resolution by the requisite majority
of votes of the Pioneer Foods Shareholders and to the other Conditions being fulfilled
or, where applicable, waived.
10.3. In addition, in order to facilitate the disposal of the BEE Trust's remaining shareholding
in Pioneer Foods, Pioneer Foods shall agree, pursuant to the 2012 BEE Subscription
Agreement Addendum, with effect from the business day succeeding the Scheme
Finalisation Date and subject to the approval of the BEE Trust Repurchase Resolution
by the requisite majority of votes of the Pioneer Foods Shareholders and to the other
Conditions being fulfilled or, where applicable, waived, to exercise the option to
repurchase those residual shares held by the BEE Trust ("BEE Trust Residual
Repurchase Shares"), for an amount per share equal to the Per Share Scheme
Consideration. The PepsiCo Offeror will fund this repurchase of the BEE Trust Residual
Repurchase Shares (but not fund the repurchase of the BEE Trust Repurchase Shares).
11. BEE PAYMENT
11.1. In early 2019, certain direct and indirect participants in the 2012 BEE Transaction
("2012 BEE Transaction Participants") elected to sell the Pioneer Foods Ordinary Shares
directly or indirectly held by them to Pioneer Foods. Pioneer Foods acquired in
aggregate 11 563 013 Pioneer Foods Ordinary Shares from them on 15 March 2019 at
R78.19 per Pioneer Foods Ordinary Share ("March BEE Repurchase").
11.2. A non-binding expression of interest to enter into the Transaction was subsequently
received by Pioneer Foods from PepsiCo.
11.3. Considering that:
11.3.1. the 2012 BEE Transaction Participants were not entitled to freely dispose of their
Pioneer Foods Ordinary Shares prior to the March BEE Repurchase;
11.3.2. Pioneer Foods benefitted from the shareholding of the 2012 BEE Transaction
Participants in Pioneer Foods under applicable broad-based black economic
empowerment legislation; and
11.3.3. the non-binding expression of interest was received shortly after the implementation
of the March BEE Repurchase,
the Independent Board decided that Pioneer Foods will, on the Scheme Implementation
Date, subject to Pioneer Foods Shareholder approval, and to the fulfilment or, where
applicable, waiver of the other Conditions, pay directly or indirectly the 2012 BEE
Transaction Participants (whether directly or indirectly, as Pioneer Foods determines
acting reasonably) an amount of R7.50 per each of the 11 563 013 Pioneer Foods
Ordinary Shares repurchased from the 2012 BEE Transaction Participants in terms of
the March BEE Repurchase, totalling in aggregate R86 722 597.50 ("BEE Payment").
12. MATERIAL PROVISIONS OF THE IMPLEMENTATION AGREEMENT
12.1. Non-solicitation by Pioneer Foods
In terms of the Implementation Agreement, Pioneer Foods has provided certain non-
solicitation undertakings to PepsiCo that are appropriate for a transaction of the nature
of the Transaction.
12.2. Other interim period undertakings
In terms of the Implementation Agreement, Pioneer Foods has provided certain interim
period undertakings to PepsiCo that are appropriate for a transaction of the nature of the
Transaction.
12.3. Representation and warranties
In terms of the Implementation Agreement, each of Pioneer Foods and PepsiCo has
provided to the other representations and warranties appropriate for a transaction of the
nature of the Transaction, including but not limited to warranties in relation to power,
capacity and authority to enter into and perform its obligations under the Implementation
Agreement.
12.4. Termination
12.4.1. The Implementation Agreement is subject to termination in any of the following instances:
12.4.1.1. on written notice of termination by PepsiCo to Pioneer Foods if:
12.4.1.1.1. the Independent Board withdraws, modifies or qualifies its recommendation
of the PepsiCo Offer to Pioneer Foods Shareholders, its recommendation of
the Pioneer Foods Class A Share Comparable Offer to the Class A
Shareholders, its recommendation of the PSR Comparable Offer to the PSR
Holders and its recommendation that Pioneer Foods Shareholders vote in
favour of the Scheme Resolutions and/or withdraws, modifies or qualifies its
view that the Per Share Scheme Consideration, the Per PSR Holder
Comparable Offer Consideration and/or the Per Class A Share Comparable
Offer Consideration are fair and reasonable to Pioneer Foods Shareholders
and PSR Holders;
12.4.1.1.2. the Independent Board approves or recommends a competing Pioneer
Foods proposal, whether or not conditionally and whether or not that
approval or recommendation is legally binding on Pioneer Foods;
12.4.1.1.3. all conditions precedent to a competing Pioneer Foods proposal are fulfilled
or, where applicable, waived and a competing Pioneer Foods proposal is
completed;
12.4.1.1.4. Pioneer Foods breaches the provisions of the non-solicitation undertakings
and, if such breach is capable of remedy fails to remedy such breach within
10 business days of a written notice from PepsiCo to Pioneer Foods
requiring same; or
12.4.1.1.5. Pioneer Foods commits a material breach of the provisions of the
Implementation Agreement and, if such breach is capable of remedy,
Pioneer Foods fails to remedy such breach within the remedy period
provided in the Implementation Agreement (or if no such remedy period is
provided, then within 10 business days of a written notice from PepsiCo to
Pioneer Foods requiring same);
12.4.1.1.6. if the circular to approve the Zeder Disposal is not sent to the Zeder
Shareholders by 30 November 2019 (or such later date(s) as is/are agreed
in writing between PepsiCo and Pioneer Foods from time to time);
12.4.1.1.7. if the Zeder independent board (i) withdraws, modifies or qualifies its
recommendation to any of Zeder's shareholders to vote in favour of the
resolutions to approve the Zeder Disposal and/or (ii) its view that the Per
Share Scheme Consideration is fair and reasonable to Zeder Shareholders
and/or, more generally, of its, support for the Transaction and/or Zeder
Disposal;
12.4.1.1.8. Pioneer Foods or any material Pioneer Foods group member is the subject
of an Insolvency Event (as detailed in the Circular);
12.4.1.2. on written notice of termination by Pioneer Foods to PepsiCo if:
12.4.1.2.1. PepsiCo commits a material breach of the provisions of the Implementation
Agreement and, if such breach is capable of remedy, PepsiCo fails to
remedy such breach within the remedy period provided in the
Implementation Agreement (or if no such remedy period is provided, then
within 10 business days of a written notice from Pioneer Foods to PepsiCo
requiring same);
12.4.1.2.2. PepsiCo engages in a sustained course of action which exhibits a clear-cut,
deliberate and unequivocal intention on its part to no longer be bound by the
Transaction and/or the Transaction Agreements.
12.4.1.3. on written notice of termination by either PepsiCo or Pioneer Foods to the other
if it becomes illegal to implement all or a material part of the Transaction; or
12.4.1.4. by mutual written agreement between Pioneer Foods and PepsiCo.
12.4.2. Notwithstanding the above, the Implementation Agreement cannot be terminated
after the date on which the finalisation date announcement is released on SENS.
13. BREAK FEE
13.1. Pioneer Foods undertakes to pay to PepsiCo or PepsiCo's nominee a break fee equal
to R115 000 000 excluding value-added tax ("Break Fee"), if PepsiCo terminates the
Implementation Agreement pursuant paragraphs 12.4.1.1.1 to 12.4.1.1.5 (inclusive of
both). For the avoidance of doubt, the Break Fee shall only be payable once by Pioneer
Foods, even if more than one of the events occur as listed in in this paragraph 13.1.
13.2. PepsiCo undertakes to pay Pioneer Foods or Pioneer Foods' nominee a break fee
equal to R115 000 000 excluding value-added tax ("Reverse Break Fee"), if Pioneer
Foods terminates the Implementation Agreement pursuant to clause 12.4.1.2. For the
avoidance of doubt, the Reverse Break Fee shall only be payable once by PepsiCo,
even if more than one of the events occur as listed in paragraph 12.4.1.2.
13.3. Pioneer Foods and PepsiCo (as applicable) shall pay the Break Fee to PepsiCo or
another member of PepsiCo's group nominated by PepsiCo, or the Reverse Break Fee
to Pioneer Foods or another member of Pioneer Foods's group nominated by Pioneer
Foods within 10 business days of written demand from PepsiCo or Pioneer Foods (as
applicable).
13.4. The amount of both the Break Fee and the Reverse Break Fee are each less than 1%
of the value of the PepsiCo Offer.
14. DELISTING OF PIONEER FOODS ORDINARY SHARES
Should the Scheme be implemented, Pioneer Foods will be a subsidiary of PepsiCo and
the Pioneer Foods Ordinary Shares will be delisted from the JSE.
15. INTERESTS OF PEPSICO, PEPSICO OFFEROR, PEPSICO DIRECTORS AND
PEPSICO OFFEROR DIRECTORS IN PIONEER FOODS ORDINARY SHARES
15.1. Neither PepsiCo nor the PepsiCo Offeror holds any Pioneer Foods Ordinary Shares.
15.2. Neither PepsiCo nor the PepsiCo Offeror has had dealings in Pioneer Foods Ordinary
Shares during the six-month period prior to the date of signature of the Implementation
Agreement.
15.3. None of PepsiCo's or the PepsiCo Offeror's directors have a beneficial interest in
Pioneer Foods Ordinary Shares.
15.4. None of PepsiCo's or the PepsiCo Offeror's directors have had any dealings in Pioneer
Foods Ordinary Shares during the six-month period prior to the date of signature of the
Implementation Agreement.
16. IRREVOCABLE UNDERTAKINGS
Irrevocable undertakings have been given to vote in favour of the Transaction by the
following Pioneer Foods Ordinary Shareholders, who collectively holds 52.85% of the
Scheme Voting Shares:
Shareholder Number of Ordinary Ordinary Shares held
Shares held as a % of the Scheme
Voting Shares
Zeder Investments Limited 58 250 788 28.23%
Coronation Asset Management (Pty) Ltd 16 463 165 7.98%
BEE Trust 10 745 350 5.21%
Dipeo Capital (RF) Pty Ltd 6 477 948 3.14%
AAF Invest (Pty) Ltd 4 000 000 1.94%
Perpetua Investment Managers (Pty) Ltd 4 490 886 2.18%
Sanlam Investment Management 3 249 000 1.57%
Allan Gray (Pty) Ltd 2 274 464 1.10%
Bremer Investments (Pty) Ltd 1 327 133 0.64%
PSG Asset Management (Pty) Ltd 1 319 533 0.64%
Tertius Carstens 363 688 0.18%
Felix Lombard 83 947 0.04%
Total 109 045 902 52.85%
17. REPORT OF THE INDEPENDENT EXPERT
17.1. The Independent Board has appointed BDO Corporate Finance Proprietary Limited as
the Independent Expert, as required in terms of section 114(2) of the Companies Act
and the Companies Regulations, to issue an opinion dealing with the matters set out in
sections 114(2) and 114(3) of the Companies Act and regulations 90, 110(1) and
113(1)(a) of the Companies Regulations, to express an opinion on whether the Per
Share Scheme Consideration, the Per Class A Share Comparable Offer Consideration
the Per PSR Holder Comparable Offer Consideration and the BEE Trust Repurchase
are fair and reasonable to Pioneer Foods Ordinary Shareholders, Class A Shareholders
or PSR Holders (as applicable).
17.2. The report of the Independent Expert prepared in accordance with section 114(3) of the
Companies Act and regulations 90 and 110 of the Companies Regulations will be
provided in the Circular and will not be withdrawn prior to publication of the Circular.
17.3. Having considered the terms and conditions of each of the PepsiCo Offer, the Pioneer
Foods Class A Share Comparable Offer, the PSR Comparable Offer and the BEE Trust
Repurchase and based on the conditions set out in its report, the Independent Expert
has concluded that the terms and conditions of each are fair and reasonable to Pioneer
Foods Ordinary Shareholders, Class A Shareholders and PSR Holders, as each of these
terms is contemplated in the Companies Regulations.
18. VIEWS OF THE INDEPENDENT BOARD ON THE SCHEME (INCLUDING THE STANDBY OFFER), THE CLASS A
COMPARABLE OFFER AND THE PSR COMPARABLE OFFER
18.1. The Independent Board has appointed the Independent Expert to compile a report on
the Scheme (including the Standby Offer), the Class A Comparable Offer, the PSR
Comparable Offer and the BEE Trust Repurchase.
18.2. The Independent Board, after due consideration of the report of the Independent Expert,
has determined that it will place reliance on the valuation performed by the Independent
Expert for the purposes of reaching its own opinion regarding the PepsiCo Offer and the
Per Share Scheme Consideration, the Pioneer Foods Class A Share Comparable Offer
and the Per Class A Share Comparable Offer Consideration, and the PSR Comparable
Offer and the Per PSR Holder Comparable Offer Consideration and the BEE Trust
Repurchase as contemplated in Companies Regulation 110(3)(b). The Independent
Board has formed a view of value of Pioneer Foods Ordinary Shares, which accords
with the value of Pioneer Foods Ordinary Shares contained in the Independent Expert's
report, in considering its opinion and recommendation. The Independent Board is aware
of those factors which are difficult to quantify or are unquantifiable (as contemplated in
Companies Regulation 110(6)) which were considered by the Independent Expert and
referred to in its report, and has taken such factors into account in forming its opinion.
18.3. The Independent Board, taking into account the report of the Independent Expert, has
considered the terms and conditions of each of the Scheme (including the Standby
Offer), the Pioneer Foods Class A Share Comparable Offer, the PSR Comparable Offer
and the BEE Trust Repurchase and the members of the Independent Board are
unanimously of the opinion that the terms and conditions thereof are fair and reasonable
to Pioneer Foods Shareholders, to Class A Shareholders and to PSR Holders and,
accordingly, recommend that Pioneer Foods Ordinary Shareholders and Class A
Shareholders vote in favour of the Scheme at the General Meeting.
18.4. As at the date of this announcement, the Pioneer Foods Board has not received any
firm intention offers, other than the PepsiCo Offer set out above.
19. PEPSICO OFFEROR ACTING AS PRINCIPAL
PepsiCo confirms that the PepsiCo Offeror is the ultimate prospective purchaser of the
Scheme Shares and is acting alone and not in concert with any other person.
20. INDEPENDENT BOARD RESPONSIBILITY STATEMENT
The Independent Board accepts responsibility for the information contained in this
announcement which relates to Pioneer Foods and confirms that, to the best of its
knowledge and belief, such information which relates to Pioneer Foods is true and this
announcement does not omit anything likely to affect the importance of such information
21. PEPSICO BOARD RESPONSIBILITY STATEMENT
The board of directors of each of PepsiCo and the PepsiCo Offeror accepts
responsibility for the information contained in this announcement which relates to
PepsiCo and the PepsiCo Offeror and confirms that, to the best of its knowledge and
belief, such information which relates to PepsiCo or the PepsiCo Offeror is true and this
announcement does not omit anything likely to affect the importance of such information.
22. IMPORTANT DATES AND TIMES RELATING TO THE SCHEME
2019
Record date to determine which Pioneer Foods Shareholders are Friday, 23 August
entitled to receive the Circular
Circular posted to Pioneer Foods Shareholders and notice Thursday, 29 August
convening the General Meeting released on SENS on
Notice of General Meeting published in the South African press on Friday, 30 August
Last day to trade in order to be recorded in Pioneer Foods' Tuesday, 1 October
securities register on the Scheme Voting Record Date in order to
be eligible to vote at the General Meeting
Scheme Voting Record Date being 17:00 on Friday, 4 October
For administrative reasons, Forms of Proxy to be lodged at with Friday, 11 October
Computershare by 10:00 on
Last date and time for Pioneer Foods Shareholders to give notice Tuesday, 15 October
to Pioneer Foods objecting, in terms of section 164(3) of the
Companies Act, to the Scheme resolutions to be able to invoke
Appraisal Rights by 10:00 on
Forms of Proxy to be handed to the chairperson of the General Tuesday, 15 October
Meeting or Computershare at the General Meeting, at any time
before the proxy exercises any rights of the Pioneer Foods
Shareholder at the General Meeting on
General Meeting of Pioneer Foods Shareholders to be held at Tuesday, 15 October
10:00 on
Results of General Meeting released on SENS on Tuesday, 15 October
Results of General Meeting published in the South African press on Wednesday, 16 October
If the Scheme is approved by Pioneer Foods Shareholders at
the General Meeting:
Last date for Pioneer Foods Shareholders who voted against the Tuesday, 22 October
Scheme to require Pioneer Foods to seek court approval for the
Scheme in terms of section 115(3)(a) of the Companies Act
(where applicable) on
Last date for Pioneer Foods Shareholders who voted against the Tuesday, 29 October
Scheme to apply to court for leave to apply for a review of the
Scheme in terms of section 115(3)(b) of the Companies Act on
Last date for Pioneer Foods to send objecting Pioneer Foods Tuesday, 29 October
Shareholders notices of the adoption of the Scheme Resolution,
in accordance with section 164(4) of the Companies Act, on
Action
The following dates assume that the Scheme becomes
unconditional and that neither court approvals nor the
review of the Scheme is required and will be confirmed in the
finalisation announcement if the Scheme becomes unconditional:
2020
Scheme Finalisation Date expected to be on or about Tuesday, 11 February
Scheme Finalisation Date announcement expected to be Tuesday, 11 February
released on SENS on or about
Scheme Finalisation Date announcement expected to be Wednesday, 12 February
published in the South African press on or about
Scheme LDT expected to be on or about Tuesday, 18 February
Trading in Pioneer Foods Ordinary Shares on the JSE suspended Wednesday, 19 February
from commencement of trade on or about
Scheme Consideration Record Date to be recorded in Pioneer Friday, 21 February
Foods's securities register in order to receive the Per Share
Scheme Consideration expected to be on or about
Scheme Implementation Date expected to be on or about Monday, 24 February
Per Share Scheme Consideration payment expected to take Monday, 24 February
place on or about
Termination of listing of Pioneer Foods Ordinary Shares on the Tuesday, 25 February
JSE at commencement of trade on or about
Notes:
1. The above dates and times are subject to such changes as may be agreed to by Pioneer Foods and PepsiCo
and approved by the TRP and/or the JSE, if required. If the Conditions are not fulfilled or waived by Tuesday,
11 February 2020 (or if the Conditions are fulfilled or waived before that date), an updated timetable will be
released on SENS.
2. Pioneer Foods Shareholders should note that, as trade in Pioneer Foods Ordinary Shares on the JSE is settled
in the electronic settlement system used by Strate, settlement of trades takes place 3 business days after the
date of such trades. Therefore, Pioneer Foods Shareholders who acquire Pioneer Foods Ordinary Shares on
the JSE after Tuesday, 1 October 2019, being the last day to trade in Pioneer Foods Ordinary Shares so as
to be recorded in Pioneer Foods's securities register on the Scheme Voting Record Date, will not be entitled
to vote at the General Meeting.
3. Pioneer Foods Shareholders who wish to exercise their Appraisal Rights are referred to the Circular to be
distributed to Pioneer Foods Shareholders for purposes of determining the relevant timing for the exercise of
their Appraisal Rights.
4. The exercise of Appraisal Rights may result in changes to the above salient dates and times and Pioneer
Foods Shareholders will be notified separately of the applicable dates and times resulting from any such changes.
5. Pioneer Foods Shareholders who wish to exercise their right in terms of section 115(3) of the Companies Act,
to require the approval of a court for the Scheme, should refer to the Circular to be distributed to Pioneer Foods
Shareholders which includes an extract of section 115 of the Companies Act. Should Pioneer Foods
Shareholders exercise their rights in terms of section 115(3) of the Companies Act, the dates and times set
out above may change, in which case an updated timetable will be released on SENS.
6. Dematerialised Pioneer Foods Shareholders, other than those with own-name registration, must provide their
central securities depository participant ("CSDP") or broker with their instructions for voting at the General
Meeting by the cut-off time and date stipulated by their CSDP or broker in terms of their respective custody
agreements between them and their CSDP or broker.
7. No dematerialisation or rematerialisation of Pioneer Foods Ordinary Shares may take place from the
commencement of business on the business day following the Scheme LDT. The Scheme LDT is expected to
be on Tuesday, 18 February 2020.
8. If the General Meeting is adjourned or postponed, the above dates and times will change, but the forms of
proxy submitted for the initial General Meeting will remain valid in respect of any adjournment or postponement
of the General Meeting.
9. Although the salient dates and times are stated to be subject to change, such statement may not be regarded
as consent or dispensation for any change to time periods which may be required in terms of the Companies
Act, the Companies Regulations and the JSE Listings Requirements, where applicable, and any such consents
or dispensations must be specifically applied for and granted.
10. All times referred to are references to South African Standard Time.
23. STANDBY OFFER
23.1. If after the Scheme is proposed:
23.1.1. the General Meeting is cancelled by Pioneer Foods or not held for any reason;
23.1.2. a Competing Pioneer Foods Proposal (as defined in the Circular to be distributed to
Pioneer Foods Shareholders) is made;
23.1.3. Court approval is required but not obtained;
23.1.4. any of the Conditions is not fulfilled and where applicable not waived, or
23.1.5. the Scheme otherwise fails,
(each, a Standby Offer Trigger Event), then the Scheme will not become effective and
an offer to holders of Pioneer Foods Ordinary Shares to acquire their Pioneer Foods
Ordinary Shares by way of a general offer in terms of the Companies Act will commence
on the terms and conditions precedent consistent, mutatis mutandis, with those of the
Scheme, to the extent applicable, and the Implementation Agreement and may be
subject to an additional condition precedent that Pioneer Foods Ordinary Shareholders
tender that number of Pioneer Foods Ordinary Shares which, when accepted by the
PepsiCo Offeror, would result in the PepsiCo Offeror holding the 90% (ninety per cent)
shareholding level contemplated in section 124(1) of the Companies Act, or such lower
percentage as the PepsiCo Offeror may specify from time to time, of the issued Pioneer
Foods Ordinary Shares, which additional condition precedent, if any, the PepsiCo
Offeror shall be entitled to waive,
23.2. The Standby Offer will be a continuation of the affected transaction as defined in section
117 of the Companies Act. The Standby Offer will be implemented in accordance with
the Companies Act and the Companies Regulations and will be regulated by the TRP.
23.3. If a Standby Offer Trigger Event occurs, the dates and times pertinent to the Standby
Offer will be published on SENS and in the press.
24. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Pioneer Foods Shareholders are referred to Pioneer Foods's cautionary announcement
dated 15 July 2019 and are advised that, as the terms of the PepsiCo Offer have now been
announced, caution is no longer required to be exercised by Pioneer Foods Shareholders
when dealing in their Pioneer Foods securities.
Tygervalley
19 July 2019
Transaction advisor and Sponsor to Pioneer Foods
PSG Capital
Financial advisor to PepsiCo
UBS Investment Bank
J.P. Morgan
Centerview Partners
Legal advisor to Pioneer Foods
Webber Wentzel
Legal advisor to PepsiCo
Bowman Gilfillan Inc.
Independent Expert to Pioneer Foods
BDO Corporate Finance
Date: 19/07/2019 08:30:00
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