SodaStream Shares Rise After Sale of Rival, Announcement of Decision to Trade on TASE

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Scarlett Johansson representing SodaStream
Scarlett Johansson in ad for SodaStream. Credit: Courtesy of SodaStream

Shares of SodaStream International shot up Monday after the company’s arch-rival was sold and the Israeli manufacturer of carbonated beverage makers for the home announced it would begin trading on the Tel Aviv Stock Exchange.

Keurig Green Mountain, the maker of K-Cup single-serve coffee pods and machines, said it would be bought by an investor group led by Germany’s JAB Holding Company for about $13.9 billion, creating a global coffee giant. The Coca-Cola Company, Keurig’s biggest single shareholder and a partner in its home soda-machine business, said it would sell its shares in the company.

The deal suggests that Keurig will focus more on its core coffee business than on the cold drinks machine it introduced to compete with SodaStream.

SodaStream shares, which have fallen 80% in the past two-and-a-half years, were up 11.6% at $15.64 in Nasdaq trading late morning local time in New York.

SodaStream’s decision to trade on the TASE marks a major achievement for the bourse’s CEO, Yossi Beinart, who has been lobbying hard to bring companies to the exchange in order to lure in more investors and expand trading volumes.

SodaStream, which is based in Airport City, just outside Tel Aviv, has traded in New York since 2010. With its $295-million market capitalization, it is among the biggest Israeli companies trading exclusively overseas.

Beinart has held a series of meetings in recent weeks with SodaStream executives to make the case for the company joining the 55 others that are dual-listed on the TASE and a foreign stock exchange.

“Having its shares listed on the TASE — the company’s home market — in addition to Nasdaq, will enable the company to expand its shareholder base, in particular to attract leading Israeli institutional investors, and to offer its shareholders extended trading availability,” SodaStream said.

Its shares will join the TA-100 and TA-75 indexes two weeks after it begins trading, with a weighting of 1.6% in the TA-75 and 0.4% in the TA-100.

The bourse expects that mutual funds and managers of exchange-traded notes, which track the key indexes, will buy some $33 million of SodaStream stock, an amount equal to well over 10% of its current market cap, one reason why its shares rose so sharply Monday. But SodaStream won’t be raising capital on the TASE.

The Keurig acquisition, meanwhile, will make JAB the leader in the $6.1 billion North American single-serve coffee market.

In July, JAB formed the world’s largest pure-play coffee company, Jacobs Douwe Egberts, by combining its D.E. Master Blenders 1753 business with the coffee business of Mondelez International. JAB, the investment vehicle of Germany’s billionaire Reimann family, bought U.S. coffee companies Caribou Coffee Co. and Peet’s Coffee & Tea in 2012.

Keurig has struggled with declining sales of its coffee pods and brewers due to intense competition, while its countertop device, a cold-drink brewer developed with Coca-Cola called Keurig Kold, has failed to excite buyers since its launch in September.

SodaStream has been struggling, too, as it tries to adopt its carbonated beverages for increasingly health-conscious consumers.

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