SodaStream International Ltd. (Nasdaq: SODA) yesterday celebrated its new listing on the Tel Aviv Stock Exchange (TASE) with a 10.6% jump in its share price, following a long period of decline. The rise is not necessarily attributable to being listed on the TASE, however, but to the acquisition of another company in the field, Keurig Green Mountain, by investment company JAB.
SodaStream produces and markets home beverage carbonation systems. In the past year, it has focused mainly on the carbonated water market, following weakness in its results in the sweetened beverage market. Keurig Green Mountain produces home coffee machines, but has competed directly against SodaStream in recent years by expanding its business to the marketing of home systems for carbonated beverages. It was reported yesterday that JAB would acquire Keurig Green Mountain for $13.9 million, or $92 a share, a 78% premium on yesterday's closing price. The Keurig Green Mountain share price shot up 72% yesterday to $89, bringing the SodaStream share price up with it.
Incidentally, Keurig Green Mountain signed a strategic cooperation agreement with Coca Cola two years ago. Coca Cola invested in Keurig Green Mountain and become a shareholder in the company. The measure was regarded at the time as validation for the market in which SodaStream operates, but also as a significant competitive threat to the company.
Jerusalem Brokerage global desk and foreign currency manager Ilan Stark today predicted, "The acquisition premium in the deal motivated investors to buy SodaStream shares, believing that SodaStream would benefit from the acquisitions of a competitor." Stark reminded his readers that in the past, reports of such negotiations for the acquisitions of SodaStream were reported, adding, "This deal for Keurig Green Mountain is likely to lead to additional deals in the market."
Joining the TASE without raising capital
SodaStream's listing on the TASE is good news for the local stock exchange, because, in recent years, many dual-listed companies chose to be delisted from the TASE, leaving them with their Wall Street listing. The most recent of these was Silicom Ltd. (Nasdaq:SILC; TASE:SILC), slated for delisting from the TASE in January.
In contrast to the foreign biomed companies that have been listed for trading on the TASE, even though they have no connection with Israel, SodaStream is an Israeli company, the kind of company people always ask why it is listed on Wall Street, but not on the TASE. SodaStream will be added to the Tel Aviv 75 and Tel Aviv 100 indices, and exchange traded funds (ETFs) are expected to spend $33 million on buying its shares, amounting to 10% of its current $326 million market cap (the SodaStream share has lost 80% of its value since its peak in 2011, and 23% since the beginning of the year). SodaStream CEO Daniel Birnbaum said, "Although we don't intend to raise capital on the TASE at this stage, and although this is a natural step in our global development, it is certainly an exciting day. Having a strong stock exchange is a supreme economic interest for Israel. I hope that other Israeli companies listed for trading overseas register their shares for trading on the TASE, too."
Published by Globes [online], Israel business news - www.globes-online.com - on December 8, 2015
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