The parent of Plano-based Frito-Lay said Monday it plans to acquire make-your-own soft drink brand SodaStream in a deal valued at $3.2 billion.
The move will bring Israeli-based SodaStream International Ltd. under American ownership, and give PepsiCo more points for moving to decrease the amount of plastic flowing into landfills and seas.
It removes what initially was seen by some as a threat to PepsiCo's bottled soda business, which has struggled as consumers migrate to healthier choices.
And it follows in the footsteps of Dr Pepper's recent acquisition by the parent of in-home-beverage maker Keurig.
Under the deal, announced before the market opened, PepsiCo has agreed to acquire all outstanding shares of SodaStream for $144.00 per share in cash, which represents a 32 percent premium to the 30-day average price.
PepsiCo Chairman and Chief Executive Indra Nooyi, who has announced plans to step down, called SodaStream an "extraordinary company that is offering consumers the ability to make great-tasting beverages while reducing the amount of waste generated. That focus is well-aligned with 'Performance with Purpose,' our philosophy of making more nutritious products while limiting our environmental footprint."
The buyout offer is "validation of our mission to bring healthy, convenient and environmentally friendly beverage solutions to consumers around the world," Daniel Birnbaum, SodaStream chief executive said in a statement.
In a note to investors, Bonnie Herzog, managing director of equity research for Wells Fargo Securities, said she thinks the move can help accelerate PepsiCo's "ongoing strategic shift towards adding healthier options across its product mix and ... complement the company's growing water portfolio _ including its recently launched bottled sparkling water brand Bubly."
And PepsiCo's "large global footprint will likely provide SodaStream with access to new markets and stepped-up" spending on marketing and research.
"That said," she questioned whether the deal "will do much to solve (PepsiCo's) ongoing struggle to improve volumes in its North American beverage segment" which remain weak despite some recent improvement.
"In short, we remain concerned about challenges facing (PepsiCo's) core business _ and, as such, continue to see limited upside for" PepsiCo in the near term.
All three of the top soft drink brands have worked to find next-generation solutions to consumers' taste for less sugar and more eco-friendly offerings.
Last month, the former Dr Pepper Snapple Group said it had successfully completed its merger with Keurig Green Mountain.
That transaction created the seventh-largest U.S. food and beverage company with annual revenue of about $11 billion.
Herzog noted that market leader the Coca-Cola Company had acquired a stake in Green Mountain in 2014. The soft-drink-making system the two developed was discontinued in 2016 due to weak demand, according to Bloomberg, after Coke spent more than $1 billion on the deal.
