PepsiCo Buys Israel’s SodaStream 27 Years After Ending Boycott On Israel

YouTubeScarlett Johansson in a 2014 advertisement for SodaStream

Pepsi will buy household drink-machine maker SodaStream for $3.2bn as it battles chief rival Coca-Cola for an edge in the health-conscious beverage market.

PepsiCo will buy the Israel-based DIY soda company SodaStream in a deal worth $3.2 billion (£2.5 billion). That's 11% higher than Friday's closing price and would be PepsiCo's largest acquisition in eight years. The Israel-based company, which produces machines that allow people to make fizzy drinks in their own homes, has positioned itself as a provider of a healthy product in contrast to traditional sugary, carbonated drinks. PepsiCo said the move is also meant to boost sustainability because consumers fill reusable bottles.

Earlier this month, SodaStream reported its strongest results in company history, a 31 percent year-over-year jump in revenues to $172 million, an 89 percent leap in operating profit to $32 million and an 82 percent climb in net profit to $26 million.

Waning soda consumption and environmental concern have led soft-drink producers to try to tap the at-home market, though success has been elusive.

PepsiCo chairman and chief executive Indra Nooyi described the companies as "an inspired match".

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"Daniel and his leadership team have built an extraordinary company that is offering consumers the ability to make great-tasting beverages while reducing the amount of waste generated", Ms Nooyi said in the statement.

Nooyi is stepping down from the top job at PepsiCo later this year, but the move shows that Pepsi's CEO-elect, Ramon Laguarta, will continue focusing on healthier alternatives. In 2014, PepsiCo tested sales of homemade brands through the Israeli company's system.

SodaStream was set up in Britain in 1903 by a London gin distiller, and the company still had a factory in Peterborough as late as 2003, when production transferred to Israel and the West Bank under its new Israeli owners. SodaStream has argued that boycotts and protests have hurt Palestinians more than helped them.

Goldman Sachs and Centerview advised PepsiCo, while Perella Weinberg Partners gave advice to SodaStream.

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