M&A

PepsiCo to Buy SodaStream for $3.2B

The deal is seen as part of Pepsi’s push into more health-conscious beverage markets.
William SprouseAugust 20, 2018
PepsiCo to Buy SodaStream for $3.2B

PepsiCo has entered into an agreement to buy SodaStream, the maker of carbonated-drink machines, for $144 per share, a 32% premium to the 30-day, volume-weighted average price of the company’s shares. The price also represents a 10.9% premium to SodaStream’s closing price on Friday. The deal is valued at $3.2 billion, the companies said.

PepsiCo said the deal was part of its effort to promote, “health and wellness through environmentally friendly, cost-effective, and fun-to-use beverage solutions.” SodaStream markets itself as a health-conscious and environmentally-conscious alternative to soda. PepsiCo agreed to buy Bare Foods in May and KeVita drinks in late 2016.

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The deal will be funded with PepsiCo’s cash on hand, the companies said.

SodaStreamAccording to Euromonitor, sales of carbonated soft drinks have been flat while bottled water sales have grown at a 6.2% compound annual rate for the last five 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,” Euromonitor International analyst Matthew Barry told Reuters.

Analysts say the deal also gives PepsiCo a way to reach consumers directly in their homes. Seventy percent of shoppers are expected to buy groceries online by 2025, according to Food Marketing Institute and Nielsen.

“PepsiCo and SodaStream are an inspired match,” PepsiCo Chairman and Chief Executive Officer Indra Nooyi said.

SodaStream CEO Daniel Birnbaum said the transaction marked an important milestone in the Lod, Israel-based company’s journey. “It is validation of our mission to bring healthy, convenient, and environmentally friendly beverage solutions to consumers around the world,” he said.

Nooyi’s role is being taken over by Ramon Laguarta later this year. She has been CEO of PepsiCo for 12 years.

The companies said the deal was expected to close by January 2019, subject to shareholder approvals. It was unanimously approved by both boards.

Photo: Wassersprudler.de, via Wikimedia Commons, CC BY-SA 4.0