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SodaStream Surges on a Possible Investment by Starbucks: Report

NEW YORK (TheStreet) - SodaStream International (SODA - Get Report) is surging 13% after an Israeli publication said Starbucks (SBUX - Get Report) was in "advanced talks" to acquire a 10% stake in the at-home cold carbonated beverage maker.

According to Globes, the stake would value SodaStream at $1.1 billion. The article cited SodaStream's market cap at $850 million, with Starbucks' offer reflecting a 30% premium. SodaStream's market cap is currently upwards of $950 million due to the stock surge.

The Globes sources said an announcement of a deal will be made soon. SodaStream is based in Airport City, Israel.

Shares of SodaStream were rising 12.6% to $45.54 following the report, while Starbucks shares were falling 0.79% to $70.59.

In February, Coca-Cola (KO) announced it had acquired a 10% stake for $1.25 billion in Green Mountain Coffee Roasters (GMCR), the maker of the single-serve Keurig machine, in order to collaborate on rolling out the forthcoming Keurig Cold machine likely sent SodaStream into a tailspin.

The Globes report states that SodaStream has been seeking a partner, according to "market sources" similar to the Coca-Cola and Green Mountain deal. Pepsi (PEP), Dr. Pepper Snapple (DPS) and Starbucks have been previously named as potential investors.

Despite European popularity, SodaStream's machines are only in 1% of American homes, compared to 25% of homes in Europe. A collaboration with Starbucks could open up a larger distribution platform and marketing incentives, "such as sales campaigns and special flavors for Starbucks customers," the article says.

At the time of the Coca-Cola and Green Mountain deal, Wall Street had pondered whether a Starbucks and SodaStream combination wouldn't be so far-fetched, given Starbuck's experimentation into "handcrafted cold carbonated beverages, which should be rolled out to one-third of its stores this summer," according to a February research note by Wells Fargo Securities analyst Bonnie Herzog.

Starbucks declined to comment when TheStreet asked for comment. SodaStream declined to comment on the rumor according to Globes.

--Written by Laurie Kulikowski in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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