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IPOreport -- SodaStream Intn’l (SODA)

|Includes: SodaStream International (SODA)
IPO calendar, Nov 1 wk

SodaStream Intn’l (NASDAQ:SODA) $90mm IPO
With a market cap of $336mm at price range mid-point of $19
Scheduled for Wed Nov 3

SODA Valuation Metrics

SUMMARY
. Niche home carbonation-device business
. May depend on the quality of tap water municipal tap water
. Annualized P/E ratio of 30, however…
…for the six months ended June 30 2010 income' of $5.6mm included $2mm of 'other-non-specified' income
. EBITDA was only 10% of income for the June six months

BUSINESS
. Home beverage carbonation systems
. Enables consumers to easily transform ordinary tap water instantly into carbonated soft drinks and sparkling water
. Currently sells products through more than 35,000 retail stores in 39 countries, including 24 countries that SODA has entered since the beginning of 2007.
. You can buy en entry level model at Amazon for $100, be sure & read the reviews
http://www.amazon.com/Sodastream-Fountain-Soda-Maker-Starter/dp/B001KYT6CS

MARKET SHARE
. SODA believes it is the world’s leading manufacturer of home beverage carbonation systems.
. Belief is based on consumer surveys SODA commissioned that show SodaStream has the largest market share in each of a dozen of the largest markets in which it operates and
. The lack of a competing home beverage carbonation system in the significant majority of other markets around the world, including the United States.

OVERALL MARKET SIZE
. According to Datamonitor, the global off-premise soft drink and global sparkling water industries generated approximately $206 billion and $27 billion, respectively, in retail sales in 2008.
. The United States led most other markets with annual per capita off-premise carbonated soft drink consumption of 118 liters in 2009, representing an aggregate of $39 billion in sales.

COMPETITION
. Existing competitors in certain regions include AGA and Vikingsoda (Nordics only), Soda 2000, Soda-Quick, Drink-it (India, Sweden), WasserMate, L’acqua di Qui and OBH/Nordica.
. In September 2009, SODA acquired most of the assets of Wassermaxx, previously one of the largest competitors in Germany, the Nordic countries, France and Italy.
Consumables
. In the US there is a stocking issue for consumables, according to Amazaon reviews (see above)
. Also faces competition with respect to some of the consumables, in particular in the CO2 refill business and flavors.
. Third parties may manufacture and refill cylinders that can be used with SODA’s soda makers, including AGA in the Nordics.
. A recent court ruling in Germany allows consumers, as well as retailers who are not party to written agreements with SodaStream, to refill cylinders with CO2 supplied by third parties, and current legal proceedings in Sweden are reviewing such arrangements as well.
. SODA believes that the reverse logistics needed for end-user consumers to return empty CO2 cylinders and exchange them for filled CO2 cylinders at retail stores, currently comprised of a pool of approximately two million cylinders globally, will be difficult and expensive for others to replicate.

EMPLOYEES
As of June 30, 2010, had 1,006 employees of whom 696 were based in Israel, 166 were in Germany, 30 were in the United States and 114 were in other countries. Of the total number of employees, 267 were temporary employees (most of whom work at the manufacturing facilities).

USE OF PROCEEDS
$82mm
• Repay $35.1mm in debt
• For various costs associated with the construction or purchase of an additional manufacturing facility in or near one of the existing markets, amounting  $34.0 million
•  Termination fee of $2.4mm to Fortissimo Capital
•  Balance for working capital and for other general corporate purposes.

SODA Valuation Metrics