What's going on?
American food, snack and soda extraordinaire PepsiCo agreed on Monday to buy Israeli company SodaStream, producer of the at-home sparkling water maker of the same name, in a $3.2 billion deal (tweet this).
What does this mean?
Originally a way to make soda at home (fizz water, add soda syrup, and boom – you’ve got Pepsi), SodaStream successfully rebranded itself in 2015 as a way to make sparkling water (i.e. without the sugary syrup). SodaStream’s shares were flat between 2011 and 2015, losing over 75% of their value. But, since 2016, its stock has been steadily bubbling up to new heights – surging more than 320% in the last two years – and the company just reported its best quarter yet.
Pepsi’s paying $144 for each SodaStream share, a third more than the average price over the last 30 days (companies often pay more than the current share price when they want to take a company over, sweetening the deal for existing shareholders).
Why should I care?
The bigger picture: Pepsi and Coca-Cola are playing an endless game of chess.
Pepsi’s arch-nemesis, Coca-Cola, also got itself (part of) a new toy – it bought a stake in sports drinks company BODYARMOR last Tuesday, likely to compete with Pepsi’s Gatorade. Coca-Cola tried to market an at-home cold drinks machine with Keurig Green Mountain back in 2015, but bailed a year later after it didn’t generate much fizz. Your move, Coca-Cola.
For you, personally: Health is cool and it’s here to stay, guys.
SodaStream’s transition from sugary soda maker to sparkling water maker suggests consumer tastes are well and truly set (by you) on a course to healthy (hating on brussels sprouts is so passé). This deal’s a further move in that direction, and it’s also Pepsi CEO Indra Nooyi’s swansong with the company (she’s stepping down later this year). During her tenure as head honcho, Nooyi’s steadily steered Pepsi toward healthier options.