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SodaStream International Ltd. (SODA) Message Board

  • getintoh20 getintoh20 Jul 24, 2014 6:58 PM Flag

    Citigroup’s Wendy Nicholson asks if the rumors will “prove to be more credible:”

    In the past, most M&A speculation regarding SodaStream has centered on potential strategic partnerships (Coca-Cola (KO), PepsiCo (PEP), Starbucks (SBUX)). However, with Coca-Cola’s equity stake in Keurig Green Mountain (GMCR), PepsiCo’s bruited alliance with Bevyz and Starbucks moving into the fizzy drink space themselves, each of these strategic partnerships has seemed increasingly unlikely to us. However, given the still-robust outlook in our view for the at-home carbonation category, we can see why private equity might be interested in playing a role. We also consider the timing to be attractive from a potential acquirer’s perspective given that SodaStream is trading at less than 10x 2013 EBITDA owing to its recent execution slip-ups and investor anxiety about increasing competition in the category. Further, given both SodaStream’s unleveraged balance sheet and the outlook for stronger profit margins ahead as the company’s new manufacturing facility is set to come online next year, we think that raising debt to fund an LBO of the business would be relatively easy to do.

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