PepsiCo (PEP.O) is buying household drink-machine maker SodaStream (SODA.TA) (SODA.O) in a $3.2 billion deal, it said on Monday, seeking an edge in health-conscious beverages as it battles chief rival Coca-Cola (KO.N).
Founded in the United Kingdom in 1903, SodaStream was a coveted device in British kitchens in the 1970s and 80s, allowing customers to create fizzy drinks by adding flavoured syrups to carbonated water, but it faded in popularity as soft drinks became cheaper.
"With sugary carbonates and juices struggling and no turnaround in sight, mitigating the losses through newer and healthier products will be essential for PepsiCo", said Euromonitor International analyst Matthew Barry.
The companies are "an inspired match", said PepsiCo CEO Indra Nooyi in a statement, noting that their products fit with Pepsi's goal of "making more nutritious products while limiting our environmental footprint".
Euromonitor says bottled water sales saw 6.2 percent compound annual growth in the five years to 2017, while carbonated soft drinks sales were flat. It agreed to buy Bare Foods in May and KeVita drinks in late 2016.
The acquisition has been unanimously approved by the Boards of Directors of both companies.
Israeli-based SodaStream listed on the NASDAQ in 2010.
Monday's sale looks to inject another big tax payout to Israel following previous the sales of Israeli companies such as the mobile navigation app Waze, which was acquired by Google for about $1 billion, and Mobileye, which produces technology for self-driving cars and was gobbled up by Intel a year ago for $15 billion. But the notion of creating soft drinks at home has had limited success. SodaStream's stock has surged more than 320% in the past two years after it rebranded itself as a sparkling water company.
Three years ago, the firm shut down its West Bank factory amid global boycott calls and opened a sprawling new factory deep in Israel's Negev Desert instead. It has since closed that factory and relocated to a much larger facility in southern Israel.
Goldman Sachs acted as financial advisor to PepsiCo and Centerview also acted as financial advisor to PepsiCo.