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PepsiCo Went on an Acquisition Spree Despite Market Fears During COVID-19

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For obvious reasons, the coronavirus has had a massive chilling effect on mergers and acquisitions nationwide. This includes such deep-pocketed area companies as Norwalk-based Xerox and Stamford-based Hexcel, which both quashed high-profile deals during the pandemic. Yet, somehow, PepsiCo in Purchase has charted a very different course for itself.

In February, for example, PepsiCo reported that it had purchased all outstanding stock for Be & Cheery, a subsidiary of China-based Haoxiangni Health Food Co., Ltd., an investment that cost PepsiCo $705 million. This was after PepsiCo had acquired a majority stake in Ethiopian snack-food company Senselet in January for an undisclosed amount.

But that was just the beginning.

Like a meteorology metaphor for business, PepsiCo came into March like a lion, announcing on the 11th that it would shell out $3.85B upfront (contingent on certain future tax breaks) for the April acquisition of Rockstar Energy, a California manufacturer/distributor/marketer of energy beverages and related products.

Yet even that was just prologue to another big purchase, this time $1.7B, to gobble up all outstanding stock in Pioneer Foods, a South African food-and-beverage company that exports globally. Commenting on the acquisition, PepsiCo chairman/CEO Ramon Laguarta referred to Pioneer Foods as a “highly complementary” business and that it would form “an important part of our strategy to not only expand in South Africa, but further into sub-Saharan Africa, as well.”

Most recently, in the middle of the pandemic, PepsiCo announced on April 28 that it had entered into an agreement with Weston, Florida’s, Vital Pharmaceuticals Inc., maker of Bang Energy drink, to be its exclusive distributor in the U.S. Bang currently occupies the No. 3 slot (behind Monster and Red Bull) in the energy-drink category and is distributed to more than 200,000 domestic outlets. Though the amount of the deal was undisclosed at press time, Kirk Tanner, PepsiCo’s beverages CEO for North America, said during the announcement that “this alliance plays a central role in PepsiCo’s overall energy-beverage strategy and enables us to significantly accelerate the distribution of Bang Energy to meet rising consumer demand.”

According to many industry analysts, PepsiCo’s recent moves reflect its ongoing campaign to be a larger presence not only in the competitive snack-food and energy-drink markets but also on the sub-Saharan continent as a whole.

Who’s next in PepsiCo’s crosshairs? Stay tuned.