PepsiCo to buy at-home-soda-maker SodaStream in $3.2 billion deal

Gladys Abbott
August 21, 2018

Going after consumers concerned about health and the environment, PepsiCo on Monday (Aug 20) announced the purchase of Israeli company SodaStream to tap its command of the homemade fizzy water market.

The purchase will probably be the last big move by PepsiCo chief executive Indra Nooyi, who said this month she's stepping down as head of the beverage company after 12 years in the job.

The deal is likely to close in January.

With soft-drink sales hurting in recent years as consumers shy away from sugary beverages, SodaStream Chief Executive Officer Daniel Birnbaum has shifted the company's marketing to focus on how the machines can produce carbonated water, without the flavoured syrups. Now, thanks to the $3.2 billion deal, Pepsi has access to a new market.

"Furthermore as the environmental burden of plastic waste comes to the fore, the concept can also tackle this by reducing reliance on plastic bottles".

The company's website celebrated the news with a 20 per cent discount offer using the code "PEPSICO" - but it's only good for 24 hours. SodaStream's stock has surged more than 320% in the past two years after it rebranded itself as a sparkling water company.

The PepsiCo CEO, Ramon Laguarta, claims that he thinks the company will remain in Israel "forever" because "the infrastructure is so powerful".

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This represents a 32% premium to the 30-day volume weighted average price.

SodaStream's revenues were US$543.4 million, while PepsiCo had revenues of US$63.5 billion.

PepsiCo, which owns brands including Tropicana, Walkers and Doritos, said it had agreed to acquire all of SodaStream's outstanding shares at $144 (£112) each.

Morningstar analyst Sonia Vora said acquisition fit well with PepsiCo's push for "more natural and nutritious offerings", but added that it was unlikely to significantly boost earnings because of SodaStream's small size.

But many consumers only buy the SodaStream machines to make fizzy water without adding any flavors.

After Coca-Cola bought the stake in Green Mountain in 2014, Nooyi said in an interview PepsiCo would avoid committing to a single technology in at-home soda makers.

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