PepsiCo (PEP, Financial) informed the market Wednesday that the acquisition of SodaStream International Ltd. (SODA, Financial) has been completed following the purchase of all outstanding common stock of the company at a price of $144 per share.
SodaStream International is an Israel-based company engaged in the production, distribution and sale of home beverage carbonation systems. SodaStream’s home beverage carbonation systems transform tap water into sparkling water, which can also be flavored.
The Israeli company operates in the Americas, Europe, Africa, the Middle East and the Asia-Pacific through a network sale composed of approximately 80,000 retail stores and almost 2,000 employees. The company’s home beverage carbonation systems are distributed worldwide in 45 different countries.
The company has steadily increased revenues through time and at a pace of 1.1% every year over the last five years, as the chart of GuruFocus.com illustrates.
The profitability and growth profile of the company is above average according to GuruFocus, which has assigned a rating of 7 out of 10. The rating is mainly a result of a high net profit margin. The company is making 15 cents net profit from each dollar of sales while most of its competitors have a net margin that does not go beyond 4%. Looking ahead, consensus is for a progression in net earnings for the next five years at a 15% annual growth rate.
SodaStream allows PepsiCo to join the at-home marketplace, according to CEO of PepsiCo, Ramon Laguarta.
SodaStream will also contribute to the payment of a dividend to PepsiCo's shareholders.
Following the announcement, the share price of PepsiCo could rise from the market value of $117.80 at close Tuesday but should not affect the forward dividend yield of 3.12%. The forward dividend yield of PepsiCo is compelling compared to the industry median of 2.21% and to a dividend yield of 1.94% of the S&P 500 index as of Dec. 4.
The remuneration results from a 15.2% year-over-year growth in the quarterly cash dividend of 92.75 cents that PepsiCo. will pay on Jan. 7 to shareholders of record Dec. 7, and from a 1% drop in the share price to $117.80 for the 52 weeks through Tuesday.
The stock has a 52-week range of $95.94 to $122.51. The price-earnings ratio is 33.95 versus an industry median of 23.36, and the price-sales ratio is 2.60 versus an industry median of 1.36. PepsiCo has a market capitalization of $167.95 billion as of Dec. 4.
The stock has a recommendation rating of 2.5 out of 5 and an average target price of $116.21 per share.
Disclosure: I have no positions in any securities mentioned.
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