Something in SodaStream’s books initially caught the eye of Fortissimo’s Managing Partner, Yuval Cohen
Published in Globes on August 22, 2018
The sale of SodaStream (Nasdaq: SODA) to PepsiCo for $3.2 billion would have seemed like a wild dream 12 years ago. The company, then called Soda-Club, was in deep trouble with debt of $30 million to banks in Israel and Germany, and was seeking an investor to help it get out of the mess.
Israel’s Fortissimo Capital private equity fund examined the possibility of investing in the company. Fortissimo’s Managing Partner, Yuval Cohen, told Globes, “The company’s numbers looked lousy and we had no desire to invest in it at all. The company was about to go bankrupt. The banks wanted the money and there were operational problems as well as legal procedures in Germany.”
Nevertheless, Cohen identified an investment opportunity in SodaStream because of one thing in the company’s reports: the gross profit was 64% and, according to Cohen, pointed towards the recurring revenue from loyal customers.
Fortissimo invested $12 million in Soda-Club (renaming it SodaStream) and subsequently sold its entire holdings for $223 million – great returns by any measure.
So Cohen was watching from the sidelines this week when PepsiCo snapped up SodaStream for $3.2 billion. He said, “I felt an amazing sense of pride and satisfaction at the closing of a circle.”
Globes: Did you ever think in the past that SodaStream could be sold for the kind of price that PepsiCo is paying?
Cohen said, “I always knew that the company could succeed but I can’t say we thought about such a value in our dreams. We always knew that the company’s growth potential was large but a lot of stars were aligned for such an amazing deal.”
Cohen learned about the huge deal in a phone call from SodaStream CEO Daniel Birnbaum. Cohen had brought him to the company, having had to persuade him to overcome his initial resistance to the idea. “We were very good friends who met up all the time,” Cohen recalls. “Daniel had been one year below me at Harvard Business School and we became good friends back then.”
So in 2007, Cohen and Birnbaum teamed up with Cohen as Chairman and Birnbaum as CEO. Together they led a turnaround with an emphasis on marketing and sales.
“Daniel is a champion at leveraging the latest trends,” explains Cohen.
The first trend was environmental with the company penetrating the US market with a message against disposable plastic bottles. In recent years the company has ridden the health trend, switching its focus to the sparkling water market instead of sweetened drinks.
“That’s one of the reasons that PepsiCo bought SodaStream after looking at it in the past several times,” Cohen says.