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PepsiCo to buy SodaStream for US$3.2b to cut bottle use

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PepsiCo Inc agreed to buy SodaStream International Inc for US$3.2 billion, gaining the Israeli company's technology for making soft drinks at home amid rising concern about plastic waste.

[GENEVA] PepsiCo Inc agreed to buy SodaStream International Inc for US$3.2 billion, gaining the Israeli company's technology for making soft drinks at home amid rising concern about plastic waste.

PepsiCo will pay US$144 a share in cash, the companies said in a statement on Monday. That's 11 per cent higher than Friday's closing price and would be PepsiCo's largest acquisition in eight years. SodaStream shares were suspended in Tel Aviv on Monday morning.

Waning soda consumption and environmental concern have led soft-drink producers to try to tap the at-home market, though success has been elusive. Coca-Cola Co ventured into single-serve machines when it bought a stake in Green Mountain Coffee Roasters in 2014, though the soft-drink-making system they developed was discontinued in 2016 due to weak demand. SodaStream chief executive officer Daniel Birnbaum has shifted the Israeli company's focus from making at-home soft drinks to producing carbonated water.

The purchase will probably be the last big move by PepsiCo CEO Indra Nooyi, who said this month she's stepping down as head of the beverage company after 12 years in the job.

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"Daniel and his leadership team have built an extraordinary company that is offering consumers the ability to make great-tasting beverages while reducing the amount of waste generated," Ms Nooyi said in the statement.

SodaStream sells machines that carbonate tap water. The company has targeted big soda makers in ads in the past, criticizing them for making excessive waste.

SodaStream has been the focus of controversy in the Middle East. Protesters claimed victory when the company closed a factory in the West Bank in 2014, which the opponents said was part of Israel's illegal occupation of the territory. SodaStream has argued that boycotts and protests have hurt Palestinians more than helped them.

Goldman Sachs and Centerview advised PepsiCo, while Perella Weinberg Partners gave advice to SodaStream.

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