PepsiCo buys Israel's SodaStream for $3.2 billion

Ivan Schwartz
August 21, 2018

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

SodaStream, which is listed on the NY and Tel Aviv stock exchanges, has not been immune to the complex politics in its home region.

Sodastream has grown strongly in Europe and Asia in recent years but growth in the USA has been sluggish.

SodaStream, which claims it is the largest sparkling water brand in the world, provides machines that enable consumers to make their own fizzy drinks or flavoured waters - meaning there is less need to buy bottles of drink.

SodaStream shares jumped 9.4 per cent to close at US$142.11 in NY, while PepsiCo slipped 0.1 per cent to US$114.94.

Under the deal, announced before the market opened, PepsiCo has agreed to acquire all outstanding shares of SodaStream for $144.00 per share in cash, which represents a 32 percent premium to the 30-day average price.

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.

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"Clearly, this is all about growth", Laguarta said, noting that SodaStream would benefit from PepsiCo's resources in research and development, design and distribution.

A turnaround at SodaStream over the last two years was helped by activist hedge fund manager Teleios Capital Partners, which nominated an external candidate to the board in 2016.

Still, the notion of creating soft drinks at home has had limited success to date.

SodaStream was founded in 1903 by London Gin distiller W & A Gilbey.

Coca-Cola and Keurig Green Mountain forged a partnership in 2015 to market a counter-top cold-drinks machine, but pulled the plug the following year after it failed to take off.

The deal is expected to go through by January 2019 after approval by SodaStream shareholders but the deal has been unanimously approved by the directors of both companies.

Goldman Sachs acted as financial advisor to PepsiCo and Centerview also acted as financial advisor to PepsiCo.

Other reports by GizPress

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