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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.
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