For years, people have speculated that the close relationship between PepsiCo and SodaStream could result in a deal and those speculations just became a reality. On Monday, the beverage giants announced that PepsiCo will be buying SodaStream for $3.2 billion.
Find the best trading platform. You capital is at risk when trading. Be careful.As consumers are getting more aware and concerned about health, New York-based PepsiCo
has been forced to meet the demand with healthier versions of their sugar-packed sodas. In addition, consumers are spending more and more online which is another hurdle that PepsiCo is struggling to conquer. In fact, according to the Food Marketing Institute and Nielsen, 70 percent of consumers will buy their groceries online by 2025.
SodaStream is a Tactical Purchase
SodaStream was founded in 1903, and in 2004 they launched a product that allowed customers to make their own carbonated drinks at home. Today the company has two major streams of revenue. The first one comes from selling carbon dioxide units to private users and the second stream of revenue comes from customers changing the units for new ones.
In the last quarter, SodaStream’s sales of new units increased by 22 percent and the re-charging of units has increased by 17 percent. These impressive numbers resulted in the company tripling their yearly forecast which saw the stock surge by 26 percent.
SodaStream’s stock had increased by almost 85 percent this year before the PepsiCo deal became official,
According to experts, the purchase of SodaStream is one of the bravest moves PepsiCo’s CEO Indra Nooyi has made during her 12 years as head of the company and probably also her last since she is stepping down in October. Most experts also agree that the deal will most likely yield great results for the beverage giant.
PepsiCo’s CFO, High Johnston, told CNBC that he is looking forward to developing a new business where the company can reach consumers in their home and not only from the shelves of their local store.
Ramona Laguerta, the incoming CEO at PepsiCo, confirmed that the company is looking forward to shifting some of their focus to carbonated water and health-conscious solutions.
At the same time, SodaStream’s management is excited about their new potential to broaden their reach and take advantage of the global influence that
Pepsi has earned over the years. Today, SodaStream distributes products to 80,000 retailers in 45 countries across the globe with the biggest markets being Germany, France, Canada, and the United States.
The deal is said to be finalized by the end of January 2019.
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