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Sodastream International Ltd (SODA), PepsiCo, Inc. (PEP): Could “PepsiStream” Actually Work?

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When analysts at Barclays slapped a $100 price target on shares of Sodastream International Ltd (NASDAQ:SODA) Monday, something tells me they didn’t expect the stock to take just four days to reach it.

Sodastream International Ltd (NASDAQ:SODA)Sure enough, shares of Sodastream International Ltd (NASDAQ:SODA) briefly jumped more than 40% during premarket trading today after rumors surfaced saying industry giant PepsiCo, Inc. (NYSE:PEP) was in talks to acquire the comparatively tiny at-home carbonation specialist.

Unfortunately for excited Sodastream International Ltd (NASDAQ:SODA) investors, PepsiCo, Inc. (NYSE:PEP) CEO Indra Nooyi wasted no time telling CNBC the rumor was “totally and completely untrue.” Even so, Sodastream International Ltd (NASDAQ:SODA) is still up 63% so far this year, and more than 5% today as of this writing:

Source: Google Finance.

Of course, that raises the question: Could “PepsiStream” actually make sense?

On one hand…
I agree with fellow Fool Rick Munarriz, who quickly chimed in this morning to say in no uncertain terms that this particular buyout would make little sense.

After all, he noted, acquiring Sodastream International Ltd (NASDAQ:SODA) would not only anger bottlers who depend on PepsiCo, Inc. (NYSE:PEP)’s existing business model, but also would largely make PepsiCo, Inc. (NYSE:PEP)’s core business obsolete by cannibalizing its own canned and bottled sales.

What’s more, if PepsiCo, Inc. (NYSE:PEP) were to simply buy Sodastream International Ltd (NASDAQ:SODA) with the intention of shuttering its doors to eliminate an up-and-coming competitor, you can be fairly sure the brand would suffer greatly from resulting consumer backlash. Remember, while SodaStream still only commands a less than 2% share of the 130 million households in the United States, the tiny company has made it abundantly clear it wants to make life better for consumers over the long run.

On the other hand…
Even so, nobody can ignore the fact that SodaStream is growing like a weed. Remember, I mentioned a few weeks ago that the company hopes to increase annual sales by more than 80% to $1 billion by 2016, all while en route to its long-term goal of achieving 10% market penetration here in the U.S. If that sounds a little ambitious, however, take a look at Sweden, where an impressive 25% of all consumers use SodaStream’s carbonation systems.

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