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PepsiCo to buy Israel's SodaStream in $3.2 billion cash deal

In this Wednesday, Sept. 2, 2015 photo, SodaStream products are seen at the SodaStream factory next to the city of Rahat, Israel.
(Photo/Dan Balilty

American soft drink giant PepsiCo announced Monday that it will acquire Israeli company SodaStream, which produces in-home water carbonation machines, for $3.2 billion.

The cash deal will see PepsiCo pay $144 per share for SodaStream's outstanding stock, a 32 percent premium over its average price of the past 30 days, according to a PepsiCo statement.

“PepsiCo and SodaStream are an inspired match,” PepsiCo Chairman and CEO Indra Nooyi said in a statement.

The statement said that SodaStream's producing of "great-tasting beverages" that at the same time reduce the amount of single-use plastic waste generated aligns with PepsiCo's vision of “making more nutritious products while limiting our environmental footprint.”

“Together we can advance our shared vision of a healthier, more-sustainable planet,” the statement added.

Israel's Prime Minister Benjamin Netanyahu hailed the deal following Monday's announcement. 

"The recent major acquisitions of Israeli companies prove not only the technological capabilities that have been developed in Israel but the business capabilities as well. I welcome this huge deal that will enrich the state treasury and also the important decision to keep the company in Israel," Netanyahu said in a statement. 

SodaStream, a small water carbonating machine found in many Israeli homes, provides an alternative “to single-use plastic bottles which are being revealed as a hazard not only to the environment but also to human health,” according to the company's CEO Daniel Barinboim.

“Today marks an important milestone in the SodaStream journey,” Birnbaum said in a statement. “It is validation of our mission to bring healthy, convenient and environmentally friendly beverage solutions to consumers around the world.”

Menahem Kahana (AFP)

According to CNBC, the acquisition will also allow PepsiCo to keep up with e-commerce trends, which is seeing more and more customers purchase their groceries online rather than in-store.

While the boards of directors of both companies have approved the deal, it is still subject to a SodaStream shareholder vote, regulatory approvals and other conditions, PepsiCo said, adding that closing was expected by January 2019.

The acquisition is the largest by PepsiCo in nearly a decade, Bloomberg reported, and is likely the last major move for Indra Nooyi at the company following her decision last month to step down as CEO of the company after 12 years.

PepsiCo had $63 billion in revenue last year.

SodaStream was founded in 1991 and employs some 3,500 workers who produce nearly 500,000 machines each month for sale in 46 countries worldwide.

In October 2014, the company conceded to international criticism for basing its production in Ma’ale Adumim, a Jewish settlement in the West Bank, and moved its headquarters to Tel Aviv and its production to Rahat, a Bedouin city in Israel’s south.

Before the move, SodaStream employed hundreds of Palestinians in the West Bank unable to obtain permits to work in Israel. The Palestinian workers could not stay with the company when it moved to less politically charged territory, though hundreds of new workers were hired to work in the main factory, many from Rahat.

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