PepsiCo will spend $3.2 billion to acquire SodaStream International Ltd, an Israeli firm that manufactures the popular at-home carbonated drink-maker named "SodaStream."
PepsiCo's acquisition of SodaStream should be a done deal by January 2019. It will, however, have to face a SodaStream shareholder vote and regulatory approvals. PepsiCo said its takeover will position SodaStream for further expansion and breakthrough innovation.
It agreed to pay $144 per share in cash for SodaStream's outstanding stock. This generous offering is a 32 percent premium ob SodaStream's 30-day volume weighted average price.
The acquisition gives PepsiCo a new product that will enable it to reach consumers in their homes and not through stores because of the growing popularity of the at-home carbonated drink-maker, SodaStream. Retailers are forcing brands to toe the line on price and giving shelf-space to upstart and private labels, especially those delivering non-sugary drinks.
The company sells the Sodastream countertop device that quickly turns tap water into carbonated water. Flavor can be added using special drops and syrups. It sells these products at more than 80,000 stores in 45 countries.
The SodaStream buy-in is one of the last big, and one of the boldest, moves by CEO and Chairman Indra Nooyi, who will step down from her CEO post on October 3. Nooyi said PepsiCo and SodaStream are an inspired match. She described SodaStream as an extraordinary company whose technology allows consumers to make great-tasting beverages.
Analysts said this move means PepsiCo has reaffirmed its commitment to its drinks business, which is struggling in the United States due to mounting consumer distaste for sugary, carbonated beverages. The acquisition of SodaStream also means PepsiCo won't cannibalize its legacy beverages such as Pepsi and Mountain Dew.
SodaStream International makes a machine and refillable cylinders that enable users to make their own soda or carbonated water drinks. It also sells over 100 types of concentrated syrups and flavorings used to make carbonated drinks.
PepsiCo President Ramon Laguarta, who will succeed Nooyi as CEO, said the company is finding new ways to reach consumers beyond the bottle.
The deal will allow SodaStream to expand its market through PepsiCo's international distribution network. It currently distributes its products in 80,000 retail stores across 45 countries. Its biggest markets are the U.S., Canada, Germany, and France.
PepsiCo earlier invaded the sparkling water business, launching Bubly earlier this year to fight against LaCroix. SodaStream has capitalized on the growing consumer interest in sparkling water and PepsiCo is eager to profit from this trend.
