PepsiCo taps healthier drinks market with SodaStream deal

Randal Sanchez
August 21, 2018

An Israeli fizzy drinks company long targeted by boycotters has been bought by the owner of Pepsi for £2.5 billion ($3.2 billion).

Monday's sale looks to inject another big tax payout to Israel following previous sales of Israeli companies such as the mobile navigation app Waze, which was acquired by Google for about $1 billion, and Mobileye, which produces technology for self-driving cars and was gobbled up by Intel a year ago for $15 billion.

The deal is likely to close in January.

"Together, we can advance our shared vision of a healthier, more sustainable planet", she added. PepsiCo said on Monday it's acquiring all SodaStream's outstanding shares at $144 per share, a 32 percent premium to the 30-day volume weighted average price.

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.

Israeli Prime Minister Benjamin Netanyahu welcomed PepsiCo's commitment to the country, saying "recent large acquisitions of Israeli companies prove not only their technological abilities but also the business abilities which have been developed in Israel".

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"Our workers say they are making peace, and on the way making soda as well", SodaStream CEO Daniel Birnbaum said at the press conference in Tel Aviv.

SodaStream sells machines that allow people to add carbonation to tap water at home, as well as syrups to flavor it.

SodaStream shares jumped 9.4 percent to close at $142.11 in NY, while PepsiCo slipped 0.1 percent to $114.94. In 2014, PepsiCo tested sales of homemade brands through the Israeli company's system. "PepsiCo is finding new ways to reach consumers beyond the bottle".

Speculation about Pepsi or Coca-Cola buying SodaStream has bubbled for years.

"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.

"Consumers around the world are more and more interested in low-sugar beverage options".

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