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Pepsi In $3.2B All-Cash Deal to Buy SodaStream

Pepsi - Pepsi In $3.2B All-Cash Deal to Buy SodaStream

Source: Mike Mozart via Flickr

PepsiCo (NASDAQ:PEP) is spending $3.2 billion cash to acquire at-home carbonated drinks-maker SodaStream International (NASDAQ:SODA), the companies announced today. The deal values SODA stock at $144 per share, a 32% premium to its 30-day volume weighted average price.

PEP stock was up 0.4% at 8:20 a.m. EDT in pre-market trading while the Dow Futures gained 0.2%. 

Israel-based SodaStream makes machines, flavorings and refillable cylinders that enable consumers to make their own soda or carbonated water drinks. The company has helped drive in-home soda-making that has proven to be a successful rival to traditional drinks-makers like PepsiCo and The Coca-Cola Company (NYSE:KO).

“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,” PepsiCo President Ramon Laguarta said in a statement. Earlier this month, it was announced that CEO Indra Nooyi is stepping down and will be succeeded by Laguarta in October.

The deal extends an existing SodaStream-Pepsi relationship, which began with the company selling caps for Pepsi and Sierra Mist drinks on its platform in 2015. That alliance has long-fueled rumors that Pepsi would acquire SodaStream.

SODA stock jumped earlier this month after the company reported earnings per share for the full year of 2017 was $3.29, implying that it is expecting earnings per share of roughly $4.31 for the full year of 2018. For comparison, Wall Street was looking for earnings per share of $3.56 in 2018.

PEP stock has lost 8% this year, compared to a 3.2% gain in the Nasdaq 100 index. KO stock is down less than 1% in 2018.

Already beset by anti-soda tax moves across the country and healthier eating and drinking trends, soda-makers Pepsi and Coke will likely see production costs increase. The companies rely on aluminum for their soda cans, which will now be harder to manufacture at a low price due to the recently imposed steel import tariffs from the Trump administration. KO said last month that it is upping the prices of its carbonated beverages due to the 10% tariff on imported aluminum, forcing the company’s hand.


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