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PepsiCo to Buy Soda Maker Sodastream for a Colossal $3.2 Billion

The world’s second soda giant in the world has made a big move this month by announcing it will be buying Israel’s do-it-yourself soda maker Sodastream for $3.2 billion.

“Americans have been drinking seltzer for over a century, but we’ve hit a tipping point,” remarked Barry Joseph, author of the book “Seltzertopia: The Extraordinary Story of an Ordinary Drink.” “Seltzer isn’t just a beverage anymore; it’s become a lifestyle choice.”

This is the biggest acquisition for the company in nearly ten years according to Bloomberg and the last big move for outgoing CEO Indra Nooyi. Nooyi is leaving the company this October.

Pepsi (NASDAQ:PEP) will be paying $144 a share in cash for the company’s outstanding stock, representing a 32% premium to the stock’s 30-day volume weighted average price.

Daniel Birnbaum, SodaStream CEO and Director said, “Today marks an important milestone in the SodaStream journey. It is validation of our mission to bring healthy, convenient and environmentally friendly beverage solutions to consumers around the world. We are honored to be chosen as PepsiCo’s beachhead for at home preparation to empower consumers around the world with additional choices. I am excited our team will have access to PepsiCo’s vast capabilities and resources to take us to the next level. This is great news for our consumers, employees and retail partners worldwide.”

“PepsiCo and SodaStream are an inspired match,” said Nooyi. “Daniel and his leadership team have built an extraordinary company that is offering consumers the ability to make great-tasting beverages while reducing the amount of waste generated. That focus is well-aligned with Performance with Purpose, our philosophy of making more nutritious products while limiting our environmental footprint. Together, we can advance our shared vision of a healthier, more-sustainable planet.”

The acquisition has been unanimously approved by the Boards of Directors of both companies and the transaction is subject to a SodaStream shareholder vote, certain regulatory approvals and other customary conditions. It is expected to close by January 2019.

“We get to play in a business — home beverages — where we don’t play,” said PepsiCo’s CFO Hugh Johnston to CNBC.

“SodaStream is highly complementary and incremental to our business, adding to our growing water portfolio, while catalyzing our ability to offer personalized in-home beverage solutions around the world. From breakthrough innovations like Drinkfinity to beverage dispensing technologies like Spire for foodservice and Aquafina water stations for workplaces and colleges, PepsiCo is finding new ways to reach consumers beyond the bottle, and today’s announcement is fully in line with that strategy,” said Ramon Laguarta, PepsiCo’s president who will take Nooyi’s place as CEO on October 3rd.

“Time will tell if this is a good move — it caught me by surprise,” said Bloomberg Intelligence analyst Ken Shea. “I look at it as less of a synergy and more as an additive to their business portfolio.”

Analyst Melanie Felgate of GlobalData said, “Although long established, SodaStream has remained a relatively niche brand. With the backing of a global soft-drinks giant, there is an opportunity to propel the concept mainstream.”

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