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Fizzy Bubbly: PepsiCo Purchases SodaStream For $3.2 Billion

By Maya Margit | The Media Line

August 20, 2018

SodaStream CEO Daniel Birnbaum and incoming PepsiCo CEO Ramon Laguarta tour SodaStream's manufacturing facilities in Rahat, Israel on August 20, 2018 (Credit: Eliran Avital)

U.S. beverage giant announces it will acquire Israeli at-home carbonated beverage maker

American multinational beverage and snack company PepsiCo announced Monday it is acquiring for $3.2 billion Israel-based SodaStream, which manufactures systems that allow individuals to make carbonated drinks at home.

In a statement, PepsiCo revealed it agreed to a cash-purchase of SodaStream’s outstanding shares for $144 per unit, a 32 percent premium over its average weighted share price in the past 30 days.

The announcement comes after SodaStream reported its strongest-ever earnings results on August 1, with the company noting a 31% year-over-year increase in revenues to $172 million, as well as an 89% jump in profits to $32 million.

“PepsiCo and SodaStream are an inspired match,” PepsiCo Chairman and CEO Indra Nooyi wrote in a statement.

The Israeli company gives “consumers the ability to make great-tasting beverages while reducing the amount of waste generated,” she added, highlighting the alignment with PepsiCo’s vision of creating more sustainable products in a bid to reduce “our environmental footprint.”

The deal provides the U.S. beverage company with an opportunity to market its products outside of stores, reaching consumers directly in their homes.

“Today marks an important milestone in the SodaStream journey,” Daniel Birnbaum, CEO of SodaStream, conveyed in a statement. “It is validation of our mission to bring healthy, convenient and environmentally-friendly beverage solutions to consumers around the world.”

The boards of both companies approved the acquisition unanimously, but the deal must still be approved by regulators. Nevertheless, the purchase is expected to be finalized by January 2019.

Founded in the United Kingdom in 1903, SodaStream merged with Israeli company Soda-Club in 1998 before undergoing a total re-branding. Today, the corporation produces compact machines that can be used at home to produce carbonated, flavored beverages within seconds. SodaStream employs thousands of workers in Israel, where its main operations are expected to remain.

“SodaStream is the largest carbonated water brand in the world,” the company wrote in a statement to The Media Line. “Our products are sold in 80,000 retail stores in 45 countries around the globe.”

Several years ago, the business was headquartered in the West Bank Jewish community of Ma’aleh Adumim, which led to a backlash from proponents of the pro-Palestinian Boycott, Divestment and Sanctions movement. SodaStream subsequently moved its main offices to Tel Aviv and its manufacturing facilities to the Bedouin city of Rahat in southern Israel, in the process laying off hundreds of Palestinian workers.

The company’s relationship with PepsiCo goes back several years. In 2015, SodaStream sold capsules filled with Pepsi and Sierra Mist syrup for at-home use.

Dr. Alex Coman of the Adelson School of Entrepreneurship at the Interdisciplinary Center Herzliya described SodaStream as a “miracle.”

“It’s fantastic for the economy because Israel has a major problem with [private] pension funds,” he explained to The Media Line. “The pension funds lost a lot by lending money to Israeli tycoons who ultimately did not pay them back, particularly during the 2008 sub-prime [mortgage] crisis.

“Many private pension funds are invested in SodaStream and so [now] they are going to generate a nice profit for pensioners.”

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