SodaStream May Finally Have a Suitor or Two
The buyout would come as a welcome relief for investors who have seen the stock fall from its sudsy peak of $77.80 last summer to below $30 this summer. Inventory woes and cascading margins have slammed SodaStream, and investors know that soda is no good when the fizz is gone.
Bottling Up Optimism
Buyout chatter heated up last week when Israeli business publication The Marker reported that a British investor was in negotiations to acquire SodaStream in an $840 million deal that would swap common stock for $40 a share in cash. It seemed like just the latest in a long line of empty acquisitive talk, but then things began heating up in the U.K. media channels.
The Independent reported that beer behemoths Diageo (DEO) and SABMiller (SBMRF) are considering an offer for SodaStream. The Times apparently has another source naming private equity firm KKR as an investor willing to shell out $46 a share for SodaStream.
All of these conflicting rumors would seem to be turning this buyout symphony into a cacophony, and conspiracy theorists would argue that SodaStream itself could be behind this in an effort to smoke out a potential suitor. However, you don't often see three different international publications talking up SodaStream as a purchase.
Pop a Cap Off
We've been here before. It was originally Israel's Calcalist reporting last summer that PepsiCo (PEP) had the hots for SodaStream. Canned and bottled soda sales have been sluggish. Moody's Investors Service is reporting that carbonated soft drink sales declined 2.6 percent in the U.S. last year, with an even larger drop in diet sodas. Diversifying into SodaStream's growing global operations had some merit, especially as a way for PepsiCo to extend its brands into the faster-growing home-based carbonation market.
It didn't happen. Calcalist came back five months ago, reporting that PepsiCo, Dr Pepper Snapple Group (DPS), or Starbucks (SBUX) could be taking a 10% to 16% stake in SodaStream. This followed just two months after Coca-Cola (KO) initiated a 10% stake in Keurig Green Mountain (GMCR), helping the single-serve java heavy with its upcoming Keurig Cold launch. That didn't happen either.
Earlier this summer we had Bloomberg reporting that a private equity firm was looking to buy SodaStream at $40 a share, similar to the stories that would break in the U.K. and SodaStream's home turf of Israel last week.
None of the stories have panned out, but someone seems to be aggressively trying to play Cupid given SodaStream's knack for being at the center of buyout chatter. It's easy to see why SodaStream would be receptive: Stateside sales have been slumping since late last year, and overall profitability has taken a hit. SodaStream is still gaining momentum in more established European markets, and perhaps that's why the latest round of potential acquirers is a global smorgasbord. If SodaStream isn't going to turn its U.S. operations around soon, it could be in the best interest of its investors if it does consider any serious proposals. However, after more than a year of empty chatter, the rumors are intensifying, but nothing is certain until SodaStream makes it official.
Motley Fool contributor Rick Munarriz owns shares of Keurig Green Mountain and SodaStream. The Motley Fool recommends Coca-Cola,Diageo (ADR), Keurig Green Mountain, PepsiCo, SodaStream and Starbucks. The Motley Fool owns shares of PepsiCo, SodaStream and Starbucks and has the following options: long January 2016 $37 calls on Coca-Cola and short January 2016 $37 puts on Coca-Cola. Try any of our Foolish newsletter services free for 30 days. To read about our favorite high-yielding dividend stocks for any investor, check out our free report.