PepsiCo buying SodaStream for $3.2 billion in cash

Founded in the United Kingdom in 1903, SodaStream was a coveted device in British kitchens in the 1970s and 80s, allowing customers to create fizzy drinks by adding flavoured syrups to carbonated water, but it faded in popularity as soft drinks became cheaper.

PepsiCo will pay US$144 a share in cash for the Israeli company, the companies said in a statement Monday.

SodaStream Chief Executive Daniel Birnbaum said the deal would open new markets to his company through PepsiCo's global distribution and marketing network, adding that the company would keep its operations in Israel.

"With sugary carbonates and juices struggling and no turnaround in sight, mitigating the losses through newer and healthier products will be essential for PepsiCo", he said in a research note.

SodaStream, which is listed on the NY and Tel Aviv stock exchanges, has not been immune to the complex politics in its home region. The PepsiCo chief executive announced Monday that Pepsi is buying SodaStream, one of the world's top sparkling water brands.

Pepsi said the transaction, which has been unanimously approved by both firm's boards and is expected to close by January 2019, is another step in its bid to "promoting health and wellness through environmentally friendly, cost-effective and fun-to-use beverage solutions". Coca-Cola Co. ventured into single-serve machines when it bought a stake in Green Mountain Coffee Roasters in 2014, though the soft-drink-making system they developed was discontinued in 2016 due to weak demand. SodaStream sells machines used with compatible carbon dioxide capsules and optional flavoured syrups, and its success in locking in customers allowed it to recently raise its full-year outlook.

It remains to be seen what Keurig Dr Pepper (KDP.N) will do in the space.

He said the deal "represents an excellent outcome for all shareholders".

Citing financial reasons, Sodastream closed the plant in 2015 and moved to Lehavim, in southern Israel.

In second-quarter results issued earlier in August, SodaStream's revenue grew 31 percent, driven by growth in Germany, France, Canada and the United States, while net profit rose almost 82 percent.

The move will bring Israeli-based SodaStream International Ltd. under American ownership, and give PepsiCo more points for moving to decrease the amount of plastic flowing into landfills and seas.

  • Wendy Palmer