PepsiCo buys Israel's SodaStream for $3.2 billion

Scarlett Johansson with Sodastream’s Daniel Birnbaum

PepsiCo (PEP.O) will buy carbonated drink-machine maker SodaStream (SODA.TA) (SODA.O) for $3.2 billion as it battles Coca-Cola (KO.N) for an edge in the health-conscious beverage market.

Purchasing the Israeli company, known for DIY seltzer makers like the SodaStream Mix, will push Pepsi's image in a health-focused direction, according to CNN.

The deal is likely to close in January.

Nooyi is stepping down from the top job at PepsiCo later this year, but the move shows that Pepsi's CEO-elect, Ramon Laguarta, will continue focusing on healthier alternatives.

Under the deal, announced before the market opened, PepsiCo has agreed to acquire all outstanding shares of SodaStream for $144.00 per share in cash, which represents a 32 percent premium to the 30-day average price. That's 11 per cent higher than Friday's closing price and would be the Purchase, New York-based company's largest acquisition in eight years.

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

In a note to investors, Bonnie Herzog, managing director of equity research for Wells Fargo Securities, said she thinks the move can help accelerate PepsiCo's "ongoing strategic shift towards adding healthier options across its product mix and.complement the company's growing water portfolio - including its recently launched bottled sparkling water brand Bubly".

SodaStream's revenues were US$543.4 million, while PepsiCo had revenues of US$63.5 billion.

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

Matthew Barry, senior analyst of beverages at Euromonitor International, said deals like the SodaStream purchase were vital for PepsiCo as it passes to new management.

It removes what initially was seen by some as a threat to PepsiCo's bottled soda business, which has struggled as consumers migrate to healthier choices. "It also boosts their "eco-friendly" reputation, which has been a goal for them".

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