Pepsi acquires SodaStream: One of the worlds biggest household beverage names — Pepsi (NASDAQ:PEP) — has announced plans to acquire carbonated drink-maker SodaStream (NASDAQ:SODA) in a deal estimated to be worth $3.2 billion.

The announcement was made this morning, Monday, August 20th.

Pepsi Acquires SodaStream: Pepsi In The Home

SodaStream is an Isreali company who makes a machine with refillable cylinders allowing customers to make their own soda or carbonated water drinks at home.

Because of this, the acquisition gives Pepsi a new product line, allowing customers to be reached at home rather than through a store.

PepsiCo CFO Hugh Johnston said: “We get to play in a business — home beverages — where we don’t play,”

The Deal

The agreement will see Pepsi pay out $144 USD per share for SodaStream’s outstanding stock; this includes a 32% increase on its 30-day volume weighted average price.

The two companies have batted the idea around for some time it seems, with Johnston confirming: 

“We’ve been on and off talking to [SodaStream CEO Daniel Birnbaum,] for a couple of years, not just on acquiring them … he got convinced the cultural fit would be good,”

And the deal must have been a good mutual fit as it closed in a “matter of weeks”.

Changing Tides

Both companies have felt the pressure to adapt to healthier sentiments across the globe as carbonated drink sales are falling. PepsiCo has struggled in North America as consumers move away from sugary, fizzy drinks, and to accommodate this, the company also introduced a healthier snack-line.

SodaStream also began promoting its product as a tool to simply make carbonated water as opposed to the more sugary soda’s — the latter of which it was initially famed.

This new approach worked and SodaStream reported strong quarterly earnings which beat earnings estimates. In detail, machine sales rose 22% in the quarter, to more than 1 million, while sales of gas refill units grew 17%, to a record 9.7 million.

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As a whole, SodaStream shares have gained nearly 85% since the beginning of the year.

Stock’s Today

It’s no surprise that both parties are in the green today. The deal no doubt will cause further share gains as the news spreads:

It is an acquisition that makes sense for both parties but further, it solidifies that tastes are indeed changing in today’s market; consumers are opting for the healthier option.

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