PepsiCo (PEP) said early on Friday that it has signed an agreement to acquire South Africa’s Pioneer Foods Group (JSE: PFG) for about $1.7 billion in cash, creating a “leading” food and beverage company in Africa.

The US food, snacks and beverage giant will purchase Pioneer Foods for 110.00 South African rands ($7.89) per share, which implies a valuation of about 11 times Pioneer’s full-year 2020 estimated consensus operating earnings.

The company said that Pioneer Foods — one of the largest South African producers and distributors of a range of branded food and beverage products — has a “robust, locally relevant” product portfolio that complements PepsiCo’s current lineup, with strong positions in cereals, juices, and other African nutritional food staples, including brands such as Weet-Bix, Liqui-Fruit, and Ceres.

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Additionally, the acquisition will also help PepsiCo gain a “solid” beachhead for expansion into Sub-Saharan Africa by boosting the company’s manufacturing and go-to-market capabilities, enabling scale and distribution, it said.

“Pioneer Foods represents a differentiated opportunity for PepsiCo and allows us to immediately scale our business in Africa,” PepsiCo Chief Executive Officer Ramon Laguarta said in the statement. “Pioneer Foods forms an important part of our strategy to not only expand in South Africa but further into sub-Saharan Africa as well.”

PepsiCo Sub-Saharan Africa will be led by Eugene Willemsen, who most recently served as executive vice-president of global categories and franchise management. Willemsen, who has been with the US beverage giant for almost 25 years, previously led the company’s businesses in Turkey and South-East Europe.

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