Published: Tue, August 21, 2018
Money | By Armando Alvarado

PepsiCo to buy SodaStream for $3.2 billion

PepsiCo to buy SodaStream for $3.2 billion

The purchase will probably be the last big move by PepsiCo chief executive officer Indra Nooyi, who said this month she's stepping down as head of the beverage company after 12 years in the job.

In 1991, the same year SodaStream was founded, PepsiCo finally ended its boycott on the Jewish state and entered the Israeli market.

Sodastream machines inject carbon dioxide from a pressurised cylinder into a bottle of water to carbonate it. SodaStream chief executive Daniel Birnbaum has shifted the company's focus from making at-home soft drinks to producing carbonated water.

SodaStream shares jumped 9.4 per cent to close at US$142.11 in NY, while PepsiCo slipped 0.1 per cent to US$114.94. The offer represents an 11% premium to the Friday closing price of SodaStream's US -listed stock and is 32% higher than the company's 30-day volume weighted average price.

"We remain concerned about challenges facing PepsiCo's core business and, as such, continue to see limited upside for PepsiCo in the near term", Wells Fargo analysts said.

Buying SodaStream will further boost Pepsi's health credentials.

Laguarta said PepsiCo had held talks with SodaStream several times in the past but wanted to make sure its business was solid before doing a deal.

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Adam Epstein, co-founder of Teleios, which is the fourth-largest shareholder in SodaStream, said the deal "represents an excellent outcome for all shareholders".

In the latest second quarter, revenue grew 31 percent, driven by growth in places including Germany and the United States, while net profit rose almost 82 percent.

The acquisition has been unanimously approved by the Boards of Directors of both companies.

Say "get busy with the fizzy" to a child of the 1980s and they will think nostalgically to the Sodastream, the do-it-yourself fizzy drinks machine that was notorious among parents for the mess it created. Whether PepsiCo can escape the curse of the Keurig Kold remains to be seen.

If everything goes smoothly, the deal is expected to close around January of 2019.

Goldman Sachs and Centerview advised PepsiCo, while Perella Weinberg Partners gave advice to SodaStream.

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