SodaStream Stock Jumps on Rumor of Starbucks Investment

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An employee uses a forklift to prepare pallets of SodaStream products for export at the SodaStream International Ltd. factory in Mishor Adumim.Credit: Bloomberg

Shares in SodaStream International jumped for the second time in a week on Wednesday amid new reports that the maker of home carbonation machines was in talks to sell a stake to a major American beverage company.

SodaStream shares rose as much as 14.5% to $47.29 in New York after the Israeli business newspaper Globes reported that Starbucks was in advanced talks to buy 10% of the home soft drink maker. Globes cited unnamed sources close to the deal.

SodaStream, which is based in Lod, and Starbucks declined to comment, Reuters reported.

Last week, another Israeli financial daily, Calcalist, reported that SodaStream was in early talks to sell a 16% stake to a potential investor that might be either PepsiCo or Dr Pepper Snapple Group, two other big American beverage companies. Deal-making speculation has followed the company since February, after Coca Cola took a $1.3 billion stake in Keurig Green Mountain, the maker of the popular Keurig one-cup coffee brewer, with plans to jointly launch a home soda making machine. That prompted speculation that SodaStream would pursue its own partnership with a beverage company. A tie-up with Starbucks could help SodaStream penetrate the American market, where its devices are found in only 1% of homes, compared with 25% of homes in European countries such as Sweden. Starbucks could provide SodaStream a distribution network and back sales campaigns, Globes speculated.

Akshay Jagdale, an analyst at KeyBanc Capital Markets, told Investors Business Daily in the United States that he doubted Starbucks was interested in SodaStream and that it would more likely pursue a deal with Keurig Green Mountain. “We’d be surprised if Starbucks went against this view and invested in SodaStream,” he said.

SodaStream shares have had a bumpy ride this year. Besides the CocaCola-Keurig Green Mountain challenge and share-sale rumors, the stock was hit by an earnings warning issued by the company in January for the fourth quarter of 2013. All told, its shares are down more than 9% this year.

On top of the purely business news surrounding the company, SodaStream was caught up in the Israel-boycott campaign earlier this year after it raised its profile by hiring actress Scarlett Johansson to appear in commercials during January’s Superbowl. The company operates a manufacturing plant in the West Bank.

Demonstration models of homemade soda makers, manufactured by SodaStream International Ltd., sit on display at a Home Center store in Jerusalem.Credit: Bloomberg

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