SodaStream Stock Soars Even After Report of Pepsi Offer Is Denied

Reports that PepsiCo is negotiating purchase of SodaStream for roughly $2 billion are 'completely untrue,' spokesman says, but sources in Israel suggest there may be something to the claim.

A news report that PepsiCo is in talks to buy SodaStream briefly sent shares of the Israeli company soaring on Thursday, even after Pepsi issued a denial.

PepsiCo Inc. spokesman Jeff Dahncke said the report in the Calcalist daily early Thursday was "completely and totally untrue." SodaStream, a maker of at-home carbonation machines whose headquarters are near Tel Aviv, declined to comment, saying it doesn't respond to "rumors and speculation."

Even so, shares of SodaStream International Inc. were up 6.3% at $73.71 in early trading on the Nasdaq, though off their premarket highs.

SodaStream's machines let people make fizzy drinks at home, with a variety of concentrated flavors that can be added to create different beverages. The company has been making a push to expand in the United States, in part by targeting the wastefulness of the cans and bottles generated by Coca-Cola Co. and PepsiCo Inc.

John Sicher, publisher of the industry tracker Beverage Digest, said he was skeptical of the report because any such deal would likely upset PepsiCo's bottlers, who distribute the company's beverages.

PepsiCo's denial of a SodaStream deal is much more strongly worded than the company's responses to speculation that it could be poised to buy Mondelez International Inc., which makes Oreos, Chips Ahoy and other snacks. In that case, the company simply stated that it was not interested in any large-scale mergers and acquisitions.

But market sources in Israel suggested there may be something behind the report. "Soda Stream is always scouting opportunities and it could be that right now the talks are initial feelers only," said one source. "We can't know for sure if we're talking about an acquisition, business cooperation or just rumors."

The source said that given Soda Stream's $1.4 billion market capitalization, the $2 billion price tag reported by media seemed "reasonable."

Global sales at SodaStream – which is sold in 45 countries at upscale department stores such as Harrods, as well as at budget chains like U.S. group Target Corporation – have risen more than threefold since 2009. The group booked sales of over $436 million last year, with net profit up 18% to $44 million. In the first quarter of 2013 sales were up 34% to $117 million.

PepsiCo, based in Purchase, New York, makes drinks and snacks including Gatorade, Tropicana, Doritos and Quaker Oats. 

Ariel Jerozolimski/Bloomberg