Sodastream
Transaction Background
In September 1997 Graphite Capital led the management buy-out of Sodastream from Cadbury Schweppes. Sodastream is the world’s leading manufacturer of machines, gas cylinders and concentrates for sparkling soft drinks made in the home. The business had been acquired by Cadbury Schweppes for £27 million in 1985 but had underperformed.
Deal Attractions
We backed an experienced management team. The business was growing rapidly after a number of years of decline. This growth was in new markets where there was considerable demand for the Sodastream products. Despite this growth the business represented a very small part of its parent group and there was the opportunity to acquire it for a low multiple. Given the positioning of its main competitor there was also a clear consolidation opportunity within the sector.
Achievements
- Sodastream grew rapidly into new markets in Germany, Austria and Switzerland
- products were realigned away from carbonated soft drinks towards carbonated tap water
- turnover grew by 31 per cent to £23.3 million during the year of our ownership and operating profit grew by 156 per cent to £2.8 million
Exit
- we received an approach from a major competitor and the business was sold in April 1998 for £17.1 million
- the transaction completed quickly without the involvement of a third party advisor
- the sale realised a multiple of 3.4 times our initial cost of investment and an internal rate of return of over 400 per cent
