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PepsiCo acquisition of SodaStream positioned as Israeli 'entrance'

PepsiCo and Coca-Cola gave more than $5 million in 2009 to Save the Children, a year later the nonprofit withdrew its support of a tax for soft drinks
Justin Sullivan (Getty/AFP/File)
PepsiCo has pledged to maintain SodaStream’s operations in Israel for at least 15 years

PepsiCo’s $3.2 billion acquisition of SodaStream is being hailed as an ‘entrance’ by the top American food and beverage company rather than the typical exit often sought by Israeli companies seeking to be bought out for a hefty sum.  

“We are not talking here about an exit,” CEO of Sodastream Daniel Birnbaum told a press conference on Monday in Tel Aviv, The Times of Israel reported. “We are talking here about an entrance, an investment, of a giant international firm, the biggest food and drinks company in America and the second biggest in the world, that is planting a flag here and is showing trust in the economy of Israel. ”

Birnbaum started off the conference with a statement he wished to make in Hebrew, in which he relayed the story of his father aboard the Exodus, the ship that carried mostly European Holocaust survivors to Israel following World War II but was turned back by British forces who controlled Palestine at the time, shortly before Israel’s independence in 1948.  

The SodaStream chief was joined at the conference by the newly-appointed PepsiCo CEO Ramon Laguarta, who arrived in Israel to execute the agreement, though it still awaits the approval of SodaStream’s shareholders.

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.

Mike Coppola / GETTY IMAGES NORTH AMERICA / AFP

Likening the acquisition to that of Israel’s Mobileye by Intel last year, Laguarta explained that SodaStream would remain independent, maintaining its own brand and headquarters in Israel, and seek to grow the venture locally and globally rather than cut workers and operations in the Jewish state, often a cause of concern in the “startup nation.”

“This is a growth story….We want to keep SodaStream as it is. We believe in SodaStream as a very solid company.”

PepsiCo has pledged to maintain SodaStream’s operations in Israel for at least 15 years, but Laguarta said he believed “it is going to be forever, because the infrastructure is so powerful.”

Fielding a question about boycotts of Israel stemming from SodaStream’s founding in a West Bank Jewish settlement, Laguarta explained that the business reaches 200 countries and “values diversity.”

“We feel very strongly about this partnership and what we can do with it globally,” he said adding that the company feels “comfortable with who we are” and has long done business in Israel.

In October 2014, the company conceded to international criticism that also targeted its celebrity face Scarlet Johansson for basing its production in the Ma’ale Adumim settlement in the West Bank, moving 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.

Birnbaum has blamed the prime minister’s office for blocking work permits for Palestinian workers and denying that the company ceded to boycott pressure.

Menahem Kahana  (AFP/File)

Prime Minister Benjamin Netanyahu lauded the deal as representative of the Jewish state’s innovation, applauding “the important decision to keep the company in Israel,” saying it would prosper the Jewish state.

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.

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