PepsiCo to buy SodaStream for US$3.2bil

GENEVA: PepsiCo Inc has agreed to buy fizzy-drinks dispenser SodaStream International Ltd for US$3.2bil to extend the company synonymous with sugary sodas into the homes of more health-conscious consumers.

PepsiCo will pay US$144 a share in cash for the Israeli company, the companies said in a statement.

That’s 11% higher than last Friday’s closing price and would be the Purchase, New York-based company’s largest acquisition in eight years.

In one of her final acts as chief executive officer of PepsiCo, Indra Nooyi is betting on a razors-andblades kind of business model to reanimate revenue growth that has been waning due to weak demand for traditional sugary soft drinks.

SodaStream sells machines used with compatible carbon dioxide capsules and optional flavored syrups, and its success in locking in customers allowed it to recently raise its full-year outlook.

PepsiCo said the move is also intended to boost sustainability because consumers fill reusable bottles.

SodaStream shares have jumped 49% this month after the company boosted its forecast for revenue growth this year to 23% and reported first-half figures that beat estimates.

The stock rose 10% to US$143.36 in premarket trading. With soft-drink sales hurting in recent years as consumers shy away from sugary beverages, SodaStream chief executive officer Daniel Birnbaum has shifted the company’s marketing to focus on how the machines can produce carbonated water, without the flavoured syrups.

Other soft-drink producers have tried to tap the at-home market, though success has been elusive. Coca-Cola Co ventured into the segment in 2014 when it bought a stake in Green Mountain Coffee Roasters, though the soft-drink-making system they developed was discontinued in 2016 due to weak demand.