SodaStream (SODA) may be on the bidding block after all. The New York Post reports that the company behind the namesake beverage maker that turns flat water into flavored soda has been quietly trying to sell itself for at least three months. Sources are saying that interest in acquiring the fast-growing pop star is waning.
It's just as well. SodaStream shares moved nicely higher last month, after Israel's Calcalist reported that PepsiCo (PEP 1.65%) was looking to acquire the company in a $2 billion deal.
Calcalist is a fairly reliable source, and SodaStream is headquartered in the business publication's Israel base. Just weeks earlier, Calcalist was correct in breaking the story that Israeli traffic app Waze was in play. But in the SodaStream story, putting PepsiCo as the potential buyer at roughly $95 a share didn't make sense. Why would PepsiCo buy a company that could potentially cannibalize its business, and anger its bottlers, distributors, and retail partners along the way?
Well, The New York Post claims that PepsiCo was only exploring the purchase of SodaStream's carbonator refilling business. But why would SodaStream part with such an important component of its operations?
It wouldn't be the worst thing in the world for SodaStream investors if the buyout chatter faded away. I offered up some potential suitors last month, but the ideal situation is for SodaStream to keep growing at its heady pace as an independent company.
SodaStream is at an exciting point in its growth cycle. Revenue climbed 34% in its latest quarter. Even the mature Western European market is growing at a double-digit clip, but the really sudsy explosion is taking place on this side of the Atlantic, where stateside unit sales of soda makers, carbonator refills, and syrups rose 78%, 101%, and 119%, respectively, during the quarter.
The U.S. migration is still in its infancy, with market penetration of just 1%. Green Mountain Coffee Roasters (GMCR.DL), the company behind the Keurig single-cup coffee platform that's often compared to SodaStream as a consumer-facing beverage system, is already at 13% of the market. Investors who bought early into the Green Mountain story made out nicely. That wouldn't have happened if Green Mountain had cashed out to a java giant at the time.
Skeptics who argue that a home-based soda maker will never be as popular as Keurig may want to travel to some of SodaStream's more established markets. The company already has more than 10% market penetration in four countries. Its systems are a fixture in nearly 25% of the homes in Sweden.
It the Post sources are correct, it's easy to be cynical about SodaStream's growth. Maybe it's putting itself up for sale because it sees the healthy growth decelerating soon. Finding a larger food, beverage, or kitchen appliance giant to help it take things to a new level would be a good way to keep moving in the right direction. However, SodaStream hasn't backed away from earlier claims that it sees its business more than doubling to $1 billion by 2016.
There's a real revolution happening, and that's rare in the realm of soda consumption and kitchen appliances. Unless there's a ridiculous offer out there that's too tempting to pass up on, don't sell yourself short, SodaStream.
