The New York-based company has come to an agreement to pay $144 per share via cash for SodaStream’s unsettled stock, a 32% bonus to its 30-day volume slanted typical price
The deal gives the beverage giant a direct access to the customers’ homes rather than through stores. The news comes when U.S. chandlers are in a state of alteration. According to the Food Marketing Institute and Nielsen, by 2025 70% of buyers are expected to buy groceries online. For the time being, retailers are crushing brands and providing increased shelf-space to private label brands and start-ups.
PepsiCo CFO Hugh Johnston told a leading newspaper, “We get to play in a business — home beverages — where we don’t play”.
As consumers move away from carbonated and sugary beverages, PepsiCo’s business struggled in North America, but with this strategic move it will certainly double down its beverage business.
The Israeli based company SodaStream manufactures a machine and refillable cylinders through which users can concoct their own carbonated water drinks or soda.
The acquisition marks one of the boldest moves that PepsiCo CEO Indra Nooyi has made in her 12-year tenancy as PepsiCo’s CEO.
Earlier this month, Nooyi announced her plans to step down, piloted the introduction of healthier alternatives and company’s shift away from sugary products. Nooyi has spent years warding off Nelson Peltz, activist investor’s pressure.
Nooyi’s effective tenure will be carried forward by 54year old PepsiCo President Ramon Laguarta.
Laguarta said in a statement, “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 is finding new ways to reach consumers beyond the bottle.”
As for SodaStream, the deal holds an excellent scope to widen its grasp through Pepsi’s global trajectory. Currently, SodaStream’s biggest markets include countries like Canada, the U.S., France, and Germany. The company abetted the creation of a market for in-home soda-making, but in recent years it has endorsed the product as a means to make carbonated water, adapting to the changing tastes.
The company’s earnings triplicated for the year and the newscast boosted SodaStream’s shares by more than 26%. Its machine sales rose by 22% in the quarter that is more than 1 million, whereas the sale of gas refill units grew by 17%, recording the sale of 9.7 million.
SodaStream’s shares had expanded nearly by 85% since the beginning of the year, prior to the deal’s announcement.
In an effort to strive against LaCroix, Pepsi launches its own sparkling water, Bubly.
SodaStream had begun selling caps for Sierra Mist and Pepsi drinks on the platform in 2015. Due to this longstanding relation between SodaStream and PepsiCo, speculations about Pepsi acquiring the company are made.
Johnston further elaborating on the deal stated that “We’ve been on and off talking to [SodaStream CEO Daniel Birnbaum,] for a couple of years, not just on acquiring them … he got convinced the cultural fit would be good. The deal came together in a “matter of weeks. When the deal closes, Birnbaum will continue to be a part of the company.”
As changing retail forces prompt food and beverage companies to rethink distribution, SodaStream is not the first drink appliance brand to be caught up in deal-making.
Subjected to certain regulatory approvals and SodaStream shareholder vote, the snack and beverage giant’s acquisition of SodaStream is anticipated to close by January 2019.