PepsiCo to Acquire SodaStream for $3.2B

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SodaStream (NASDAQ: SODA)

 

PepsiCo Inc. has agreed to buy SodaStream International Ltd. in a deal worth $3.2 billion. The two companies made the announcement on Monday morning, saying PepsiCo will pay $144.00 per share in cash for all outstanding stock of the Israeli-based fizzy-drinks dispenser. The price represents a 32 percent premium to the 30-day volume weighted average price.

The Board of Directors of both companies have unanimously approved the transaction, which they hope to close by January of next year. However, it is still subject to certain closing conditions, including customary regulatory approvals.

If approved, it will be the largest acquisition by PepsiCo in eight years, and a significant milestone for CEO Indra Nooyi who is set to leave the company in October. The New York-based soda company is seeking to diversify its business model and expand its global reach through the acquisition.

PepsiCo will be able to move away from its sugary beverages have continued to perform badly in recent quarters. Further, the company stands to benefit from the environmental-friendly bottles offered by SodaStream.

During the second quarter ended June 30, 2018, its North America Beverages segment posted a 16% decline in operating profit. Analysts warn that PepsiCo and other soda companies like Coca-Cola will continue to experience a drop in soft-drink sales as fewer people are drinking sugary beverages.

SodaStream is popular for its in-home soda making machines that have already won the hearts of many customers, prompting it to raise its forecast 2018 forecast. As sales of sugary drinks continue to suffer, the company has revised its marketing strategy to focus on how consumers can produce flavorless carbonated water using the machines.

SodaStream Stock Chart

Shares of PepsiCo rose marginally in the early hours of regular trading Monday. The stock has lost 4% since the beginning of the year. Meanwhile, shares of SodaStream jumped 9.7% on Monday and have rallied nearly 102% year to date.

SodaStream CEO Comments

Commenting on the deal, SodaStream Director and Chief Executive Officer Daniel Birnbaum said “Today marks an important milestone in the SodaStream journey. It is validation of our mission to bring healthy, convenient and environmentally friendly beverage solutions to consumers around the world. We are honored to be chosen as PepsiCo’s beachhead for at home preparation to empower consumers around the world with additional choices. I am excited our team will have access to PepsiCo’s vast capabilities and resources to take us to the next level. This is great news for our consumers, employees and retail partners worldwide,”

PepsiCo CEO Comments

“PepsiCo and SodaStream are an inspired match. Daniel and his leadership team have built an extraordinary company that is offering consumers the ability to make great-tasting beverages while reducing the amount of waste generated. That focus is well-aligned with Performance with Purpose, our philosophy of making more nutritious products while limiting our environmental footprint. Together, we can advance our shared vision of a healthier, more-sustainable planet,” commented Indra Nooyi. –PRNewswire

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