00:00 Speaker A
Pepsico is set to acquire prebiotic soda brand Poppi in a deal valued at $1.95 billion. Pepsico anticipating $300 million of cash tax benefits, bringing the net deal to $1.6 billion. And Poppi is a low sugar soda that incorporates apple cider vinegar was launched in 2018 and featured on Shark Tank. More recently, the brand had an ad during the 2025 Super Bowl. You can see here shares of Pepsi up nearly 2% here, but interesting to see them taking a Poppi here. You can see this is a very direct to consumer brand, lots of big influencers, the likes of Alex Earl, you can see here. They’ve been sending vending machines full of Poppi to influencers houses to increase brand awareness. Uh and I think this is smart of Pepsi to acquire a potential competitor in the space, especially given the health movement of younger soda drinkers here. But I wanted to talk to you too just about what this signals to us about deal making, which we haven’t really been seeing as much of as I thought we would see following the election of Trump.
01:47 Speaker B
Yeah, good point.
01:48 Speaker A
Yeah, I would agree. Um I would have expected a larger pickup in M&A. Maybe part of the issue is rates are still relatively high. Look, if I remember my first mortgage um was around seven and an eighth and when I refinanced at five and seven eighths, I thought I was the king. And and now all of a sudden, everyone is is just lamenting the fact that oh, I can’t get a 3% mortgage anymore. So it’s it’s it’s, you know, what we’ve grown accustomed to. But fair enough, over the past 15 years, we’ve gotten accustomed to money that was probably far too cheap. It should rates should never have gotten as cheap as they did, but they did, we got used to it. And uh we’re still used to it. And so that may be one reason why deal activity is lower because um financing costs are just higher.
03:27 Speaker B
Right. Right. Right. Yeah.
04:00 Speaker A
Yeah.
04:01 Speaker B
Um I think that’s going to correct. I also think rates will start to come down a little bit, not a ton, but they don’t need to. But uh they’ll start to come down a little bit that’ll stimulate housing. That may still stimulate uh some deal activity. What’s also fascinating is that M&A, yes, as we’re talking about is low, but so too are IPOs.
04:58 Speaker A
Right. Yeah.
05:00 Speaker B
So the capital markets um haven’t really percolated in the way that um up until three weeks ago, the stock market has percolated. I expect that to change. Um I expect that we’re going to see a pickup in activity as we get over this concern about recession. We’re not having recession. As we get over the uh concern around um tariffs, um they’re a bargaining chip. They’re not necessarily a means under themselves. And we’ve already seen some indications that they might back off a little bit. Fine. So C suite executives like to see clarity and I think they’ll get more clarity as we get into this year. But yeah, to get back to your original question, am I surprised that we haven’t seen the pickup in uh M&A activity? Yeah, I’m surprised. I do think it’s coming though.
