Shares of SodaStream International Ltd.’s (SODA - Snapshot Report) jumped to a 52-week high of $77.80 on Monday, Jun 11, on market rumors of its acquisition by snack and beverage giant PepsiCo, Inc. (PEP - Analyst Report) .
The closing price of the Israeli home soda-machine maker on Jun 10 was $76.11, representing a huge 1-year return of about 119.5%. Average volume of shares traded over the last three months stands at approximately 1541K.
Last week, an Israeli newspaper reported that PepsiCo was considering buying SodaStream. It is rumored that the purchase price was a whooping $2 billion. PepsiCo has however, denied the media reports to Reuters.
SodaStream commands a global leadership position in the home beverage carbonation market. Its soda-making systems offer a healthier and a convenient way to enjoy flavored carbonated sodas at home than the traditional soft drinks sold by PepsiCo and rivals The Coca-Cola Company (KO - Analyst Report) and Dr Pepper Snapple Group Inc. (DPS - Analyst Report) .
We believe that SodaStream would make a strategic buy for PepsiCo. PepsiCo could benefit from solid demand for SodaStream’s products in the U.S., its expanding strategic partnerships, enhanced marketing activities, regular product innovations, accretive acquisitions and successful strategic investments. These attributes have helped SodaStream deliver solid profits over the past few quarters. In fact, the company has enjoyed tremendous sales growth and expanded retail presence in the U.S. in sharp contrast to sluggish soft drinks sales witnessed by the beverage giants.
The deal will also go in sync with PepsiCo’s increasing efforts to make low calorie beverages, non-carbonated beverages and healthier snacks to reap benefits from shifting consumer preference for good-for-you and health and wellness products. Many analysts however, believe that a joint venture between PepsiCo and SodaStream was a more likely option.
Both SodaStream and PepsiCo carry a Zacks Rank #2 (Buy).