PepsiCo buys SodaStream to reach consumers 'beyond the bottle'

PepsiCo buys Sodastream for $3.2bn

PepsiCo will pay $144 a share in cash, the companies said in a statement Monday.

It reported a 31% year-over-year jump in revenues to $172m (£134m), an 89% leap in operating profit to £32m (£25m) and an 82% climb by net profit to £26m (£20m).

PepsiCo said on Monday (Aug 20) it was buying Israeli company SodaStream for US$3.2 billion as the USA beverage giant contends with falling demand for sugar-laden soft drinks among health-conscious consumers. But the notion of creating soft drinks at home has had limited success.

PepsiCo chief executive Indra Nooyi, who is stepping down following 12 years at the helm, characterised the purchase of Tel Aviv-based SodaStream as consistent with the U.S. company's sustainability push, which involves pledges on producing healthier goods, boosting water-use efficiency and reducing waste. The company has targeted big soda makers in ads in the past, criticizing them for making excessive waste. As the stock declined in 2014 and 2015, Birnbaum began the marketing shift away from sugary sodas, and it worked: PepsiCo's bid price is 10 times where the shares were trading less than three years ago.

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.

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Coca-Cola, for its part, said last week that it was buying a stake in BodyArmor, a maker of sports drinks that is endorsed by retired basketball star Kobe Bryant and offers a diet version of the drink is naturally sweetened. Investors have speculated the snack maker was pursuing SodaStream for several years.

Melanie Felgate, senior consumer insights analyst at data and analytics company GlobalData says: "SodaStream allows consumers to customize their own beverages to create not only flavors - but potentially sugar levels - to suit their needs, helping PepsiCo better meet consumer's needs for products which are not only healthier but do not compromise on taste".

However, Sodastream has commanded some negative headlines in recent years as well, due to the fact that its primary manufacturing plant was for years located in the West Bank, much to the annoyance of pro-Palestinian activists who dispute Israeli control of the territory.

Goldman Sachs acted as financial advisor to PepsiCo and Centerview also acted as financial advisor to PepsiCo.

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