Arthur J. Villasanta – Fourth Estate Contributor
Purchase, NY, United States (4E) – PepsiCo will acquire SodaStream International Ltd, an Israeli firm that manufactures the popular at-home carbonated drink-maker named “SodaStream” and a range of flavorings to cater to a market more in love with non-sugary drinks.
PepsiCo said its takeover will position SodaStream for further expansion and breakthrough innovation.
PepsiCo’s acquisition of SodaStream for $3.2 billion should be completed by January 2019. It will, however, have to hurdle a SodaStream shareholder vote and government regulatory approvals. PepsiCo agreed to pay $144 per share in cash for SodaStream’s outstanding stock. This offering is a 32 percent premium on SodaStream’s 30-day volume weighted average price.
The acquisition gives PepsiCo a new product line that will see it reach consumers in their homes and not through stores. SodaStream International makes a countertop 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.
The SodaStream buy-in is one of the last big 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.
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.
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