PepsiCo to buy Israel’s SodaStream for $3.2 billion

PepsiCo to buy Israel’s SodaStream for $3.2 billion”

PepsiCo chairman and CEO Indra Nooyi says: "PepsiCo and SodaStream are an inspired match". The $3.2 billion purchase price means Pepsi will pay $144 per SodaStream share-a 32% premium over its 30-day volume-weighted average price.

Monday's sale looks to inject another big tax payout to Israel following previous the sales of Israeli companies such as the mobile navigation app Waze, which was acquired by Google for about $1 billion U.S., and Mobileye, which produces technology for self-driving cars and was gobbled up by Intel a year ago for $15 billion US.

Sales of soft drinks, PepsiCo's traditional products, are struggling.

SodaStream, which is listed on the NY and Tel Aviv stock exchanges, has not been immune to the complex politics in its home region.

Pepsi and Israeli-based company SodaStream already have an existing relationship, with Pepsi previously selling its cola on the platform in what the company called a "learning opportunity".

If regulators approve the deal, it is expected to be finalised by January 2019, subject to a vote by Sodastream shareholders. The company had marketed itself as a more environmentally friendly alternative to mainstream bottled drinks and therefore a threat to the giant producers. SodaStream sells machines used with compatible carbon dioxide capsules and optional flavoured syrups, and its success in locking in customers allowed it to recently raise its full-year outlook. SodaStream chief executive Daniel Birnbaum has shifted the company's focus from making at-home soft drinks to producing carbonated water. The company was created last month by the merger of Keurig Green Mountain, now owned by private investment firm JAB Holding, and Dr Pepper Snapple.

SodaStream's shares have jumped 85 percent this year after a 78 percent increase in 2017 and have moved to $130 from $16.31 at the end of 2015.

PepsiCo said its global distribution network would help SodaStream expand further.

Three years ago, the firm shut down its West Bank factory amid worldwide boycott calls and opened a sprawling new factory deep in Israel's Negev Desert instead.

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