Healthy deal: Pepsi buys SodaStream for $3.2 bn

PepsiCo will buy carbonated drinkmachine maker SodaStream for $3.2 billion as it battles Coca-Cola for an edge in the health-conscious beverage market.

Founded in Britain in 1903, SodaStream was a coveted device in British kitchens in the 1970s and 80s, allowing people to create fizzy drinks by adding flavoured syrups to carbonated tap water, but its popularity faded as bottled sodas became cheaper.

The Israel—based company now markets itself as a sparkling water maker to appeal to younger and more health- and environmentally-conscious consumers, who do not drink much soda.

“With sugary carbonates and juices struggling and no turnaround in sight, mitigating the losses through newer and healthier products will be essential for PepsiCo,” said Euromonitor International analyst Matthew Barry.

Euromonitor says bottled water sales saw 6.2 per cent compound annual growth in the five years to 2017, while carbonated soft drinks sales were flat. The deal announced on Monday may be the last for PepsiCo Chief Executive Indra Nooyi, who hands over to Ramon Laguarta later this year.

In 12 years as CEO, Nooyi sought to expand the company's offering of healthier food and drinks. It agreed to buy Bare Foods in May and KeVita drinks in late 2016.

PepsiCo will pay $144 per SodaStream share in cash, representing a 10.9 percent premium to Friday’s closing price of SodaStream’s US-listed stock and a 32 per cent premium to its 30-day average.

Pepsi will pay $144 per share, in cash, to Israel-based SodaStream