Published: Tue, August 21, 2018
Finance | By Cynthia Curry

PepsiCo buys fizzy drinks maker SodaStream for $3.2bn

PepsiCo buys fizzy drinks maker SodaStream for $3.2bn

PepsiCo said it was acquiring all SodaStream's outstanding shares at $144 U.S. per share, a 32 per cent premium to the 30-day volume weighted average price.

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

PepsiCo Chairman and CEO Indra Nooyi calls the companies "an inspired match".

Israeli-based SodaStream listed on the NASDAQ in 2010.

Melanie Felgate, senior consumer insights analyst at data and analytics company GlobalData says: "SodaStream allows consumers to customize their own beverages to create not only flavors - but potentially sugar levels - to suit their needs, helping PepsiCo better meet consumer's needs for products which are not only healthier but do not compromise on taste".

Under the terms of the deal, PepsiCo will buy all outstanding shares of Sodastream for $144 each. 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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SodaStream's revenues were $543.4 million, while PepsiCo had revenues of $63.5 billion.

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.

"With sugary carbonates and juices struggling and no turnaround in sight, mitigating the losses through newer and healthier products will be essential for PepsiCo", said Euromonitor International analyst Matthew Barry.

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".

New York-based PepsiCo will fund the deal with cash on hand and has committed to keep SodaStream in Israel for at least 15 years. It is expected to close by January, pending a SodaStream shareholder vote and certain regulatory approvals.

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

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