PepsiCo to buy Israel's SodaStream in US$3.2b deal

Marcus Newton
August 21, 2018

Beverage giant PepsiCo on Monday purchased Israel's fizzy drink maker SodaStream for $3.2 billion United States, a boon for a company that has enjoyed a resurgence after being targeted by anti-Israel boycotters in the past.

PepsiCo president Ramon Laguarta, who will succeed Ms Nooyi on 3 October, said in a statement that Sodastream was "highly complementary and incremental" to Pepsi's business.

Purchasing the Israeli company, known for DIY seltzer makers like the SodaStream Mix, will push Pepsi's image in a health-focused direction, according to CNN.

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.

The deal is likely to close in January.

Pepsi's move to buy the Israeli maker of machines that turn tap water into carbonated water forms part of its strategy to shift away from sugary products in favor of healthier alternatives.

Pepsi will pay $144 per SodaStream share in cash, representing a 10.9% premium to Friday's closing price of SodaStream's US-listed stock and a 32% premium to its 30-day average.

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"Together, we can advance our shared vision of a healthier, more-sustainable planet", she said.

It removes what initially was seen by some as a threat to PepsiCo's bottled soda business, which has struggled as consumers migrate to healthier choices.

According to The Wall Street Journal, "Sparkling water has grown far more strongly than the overall bottled water category in the USA, clocking volume growth of 38% previous year up from 35% in 2016 according to data from industry tracker Beverage Marketing Corp".

Matthew Barry, senior analyst of beverages at Euromonitor International, said deals like the SodaStream purchase were vital for PepsiCo as it passes to new management.

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.

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

Other reports by MaliBehiribAe

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