SODA Jumps Again on Starbucks Deal Talks - Analyst Blog

Shares of  SodaStream International Ltd. SODA jumped again on Wednesday, this time by almost 11% on news that coffee giant, Starbucks Corporation SBUX was in “advanced talks” to buy a 10% stake in the company.

Globes, an Israeli business news site, reported on Wednesday that the Israel-based manufacturer of household soda machines is considering the sale of 10% stake to Starbucks that would value the company at $1.1 billion. The news site further added that the purchase offer represents a 30% premium on SodaStream's market price. Neither of the companies, however, commented on the possible deal.

SodaStream commented earlier this year that it is testing handcrafted cold sodas in some of its stores. The company has received good response for the sodas and plans to launch them soon. The deal with SodaStream would allow Starbucks to make branded sodas. Also, collaboration with Starbucks could enhance the distribution of SodaStream's machines.

Last week, shares of the SodaStream rose as much as 8% on April 16. Shares of the company were buoyed by news published in another Israeli website that the company was in talks to sell as much as 16% stake to a big buyer. Speculation was that the partner will be a big beverage maker, allowing SodaStream to compete more effectively in this ultra-competitive space. The Israeli website, noted that SodaStream was in talks with Pepsi PEP, Dr Pepper Snapple DPS or Starbucks.

SodaStream has been in news for the past few months more for possible buyout rumors rather than for its poor earnings performance. After cola giant, The Coca-Cola Co. KO bought a 10% stake in Keurig Green Mountain, Inc. GMCR for $1.25 billion earlier this year, there have been rumors that SodaStream may enter into a similar collaboration with Coca-Cola's rival, Pepsi.

SodaStream carries a Zacks Rank #3 (Hold).