Why SodaStream International Ltd. Shares Jumped

Is this meaningful? Or just another movement?

Jeremy Bowman
Jeremy Bowman
Apr 23, 2014 at 8:44PM
Consumer Goods

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of SodaStream International Ltd. (NASDAQ:SODA) were bubbling higher today, gaining as much 17% and closing the day up 11% on news that Starbucks (NASDAQ:SBUX) may take a stake in the countertop soda-maker. 

So what: SodaStream shares jumped last week on reports in an Israeli newspaper that a major beverage company was interested in investing in the DIY soda-maker. Today, another Israeli paper said that SodaStream was in advanced talks to sell a 10% stake to Starbucks at a valuation of $1.1 billion, or a 30% premium over yesterday's closing price. Neither company would comment on the deal.  

Now what: For years, investors have suspected that SodaStream would be a ripe takeover target for a soda giant, and those expectations have only heightened since Coca-Cola took a 10% stake in Keurig Green Mountain in February. A partnership with Starbucks seems to make sense, as the coffee chain has been branching out into other drinks including tea and natural juices through acquisitions of Teavana and Evolution Fresh. Starbucks CFO Scott Maw also said in March that the company had been testing "handcrafted" sodas, receiving an overwhelmingly positive response. A deal with SodaStream would give Starbucks easy access to soda sales not just in stores, but also in the home.

You can stay up date on this developing story by simply adding SodaStream to your Watchlist. Just click right here