Consumer Products

What Coke and Monster Mean for SodaStream

Source: courtesy of SodaStream
The Coca-Cola Company (NYSE: KO), which already has a 16% stake in Keurig Green Mountain Inc. (NASDAQ: GMCR), announced Thursday it will purchase a 16.7% stake in Monster Beverage Corp. (NASDAQ: MNST). Clearly, the world’s largest soft-drinks maker is trying to diversify outside the sugar water business. Where does that leave SodaStream International Ltd. (NASDAQ: SODA)?

SodaStream’s 52-week range is $28.65 to $69.78 ,and the stock traded early Friday morning much nearer the low-end of that range. The worse news for the company is that the 52-week high is 11 months in the rear-view mirror and the stock is down almost 50% since then. The company is no longer a growth story, even though sales were up from $208 million in 2010 to $562 million in 2013 and are projected to reach $627 million this year and $698 million next year.

The sharpest drop came after the company missed full-year 2013 income and revenue estimates in January and the stock plunged 20%. Coca-Cola’s announcement that it was taking a stake in Keurig Green Mountain came about a month later and actually juiced up SodaStream’s shares based on the idea that PepsiCo Inc. (NYSE: PEP) or even Dr. Pepper Snapple Group Inc. (NYSE: DPS) might swoop in and either acquire SodaStream or make a big investment in the Israel-based company. That didn’t happen.

There was even speculation that Starbucks Corp. (NASDAQ: SBUX) might be interested in acquiring SodaStream, but that notion fizzled almost as soon as it started. Since then, SodaStream’s shares slipped to their 52-week low late last month and have picked up a bit since then on a decent second-quarter earnings report and more speculation on a buyout.

Bloomberg reported a couple of weeks ago that there was an investment firm in talks with SodaStream to take the company private at around $40 a share. No offer has materialized yet, but as SodaStream continues to fail at finding a partner, a private buyout may be the company’s one chance to provide a little value for shareholders who bought it when the stock price was climbing to its peak.

At Friday’s stock price of around $32.50, SodaStream’s market cap is about $680 million, hardly a huge obstacle to the likes of Pepsi or Starbucks. Does that mean that industry players think that SodaStream’s best days are behind it? That appears to be the case.

And potential private equity buyers? An offer of around $40 a share would placate some, but certainly not all of SodaStream’s current shareholders. If the company took such an offer, it would almost certainly spawn many shareholder lawsuits and that would have to be figured into the offer. This is not a pretty picture either.

Does this mean that SodaStream is toast? Not at all. It does indicate, though, that while it may be a growing company, SodaStream is no longer a growth stock.

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