Last week, Israeli media publication Globes reported that Starbucks (NASDAQ:SBUX) was possibly buying a 10% interest in SodaStream (NASDAQ:SODA). Both companies declined to comment on the matter. Notwithstanding the authenticity of this piece of news, it is worth considering whether synergies exist between the two companies. More importantly, investors should also evaluate these two stocks on their individual merits before committing to either of them on M&A speculation. 

Starbuck's perspective
Over the years, Starbucks has diversified significantly, both in terms of products and geography.

In terms of products, Starbucks repositioned Seattle's Best Coffee as its mass-market offering for penny-pinching coffee lovers, while Starbucks VIA allows its loyal supporters to have freshly brewed Starbucks instant coffee at their convenience. More importantly, Starbucks has also shown significant interest in the U.S. at-home beverage and cold carbonated beverages markets.

With Verismo, its line of premium single-serve coffee makers, Starbucks has an estimated 13% market share of the domestic at-home coffee market. On the most recent earnings conference call in the second quarter of 2014, Starbucks' management talked with analysts about the progress of Fizzio, its new line of handcrafted cold-carbonated beverages.

Following the successful test launch of Fizzio in the U.S. and parts of Asia, 3,000 stores across the United States, Korea, Singapore, and several cities in China will offer the product. As the leading at-home soda maker, SodaStream will be a good fit for Starbucks as it is at the intersection of the at-home beverage market and the cold-carbonated beverages market.

With respect to geographical focus, Starbucks is traditionally strong in the U.S. and it has made significant inroads into Asia. Starbucks' Asia-Pacific business has grown at high double-digit rates in excess of 25% over the past three years; it now boasts a retail footprint of over 1,000 stores in 68 Chinese cities after operating for 15 years in China. In contrast, SodaStream is very dominant in Europe as the region accounts for more than half of its sales. For example, the penetration rates of its soda makers are as high as 25% in Sweden.

The complementary strengths of Starbucks and SodaStream in different regions will definitely be a plus factor if they work together.

SodaStream's perspective
While SodaStream is a well-known name in the investment community, the same can't be said of its brand awareness. This is particularly true in the U.S. SodaStream's U.S. household penetration rate is a mere 1%.

In comparison, Starbucks has successfully leveraged on its local footprint of coffee chains to cross-sell its other products such as Starbucks VIA and Verismo. With a diverse portfolio of coffee and beverages products meeting consumers' needs at different price points and consumption preferences (on-the-go versus at-home), Starbucks has the ability to capitalize on its strong domestic base to boost SodaStream's U.S. penetration rates.

Back to the brand topic, given the nascent nature of its at-home beverage products, SodaStream could get a leg up by associating itself with one of the strongest consumer brands in the world. Last year, Starbucks appeared in the top 100 of Forbes' list of the World's Most Valuable Brands.

In addition, SodaStream is itself no stranger to collaborating with other brands. Last year, SodaStream worked with a leading Korean electronic appliances maker to launch a refrigerator with a built-in water carbonator. In 2012, SodaStream added Kool-Aid powdered beverages to its portfolio; Kool-Aid is a iconic flavored drink mix first introduced in 1927.

Foolish final thoughts
Notwithstanding the synergies between SodaStream and Starbucks, each is attractive on a stand-alone basis. Starbucks boasts multiple growth drivers from new products and geographical expansion; SodaStream is an alternative play on the soda market, given lackluster CSD volumes.