SodaStream makes machines that carbonate home tap water, and both PepsiCo and its arch-rival Coca-Cola have been diversifying away from their mainstay fizzy drinks in part to counter the onset of anti-obesity sugar taxes around the world.
It is also the company's first big acquisition since chief executive Indra Nooyi disclosed she would step down in October after 12 years at the helm.
PepsiCo said it was acquiring all SodaStream's outstanding shares at $144 United States per share, a 32 per cent premium to the 30-day volume weighted average price.
Monday's sale looks to inject another big tax payout to Israel following previous the sales of Israeli companies such as the mobile navigation app Waze, which was acquired by Google for about $1 billion USA, and Mobileye, which produces technology for self-driving cars and was gobbled up by Intel a year ago for $15 billion US.
SodaStream, which is listed on the NY and Tel Aviv stock exchanges, has not been immune to the complex politics in its home region.
The purchase, which is expected to close by January 2019, will see PepsiCo, most famous for the Pepsi soft drink, acquire a company that specializes in the production of home fizzy drink dispensers.
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Daniel Birnbaum, SodaStream's CEO, said the company is honoured to be chosen as PepsiCo's beachhead into the at-home preparation market.
According to The Wall Street Journal, "Sparkling water has grown far more strongly than the overall bottled water category in the US, clocking volume growth of 38% past year up from 35% in 2016 according to data from industry tracker Beverage Marketing Corp".
It reported a 31% year-over-year jump in revenues to $172m (£134m), an 89% leap in operating profit to £32m (£25m) and an 82% climb by net profit to £26m (£20m).
PepsiCo said its global distribution network would help SodaStream expand further. It has since closed that factory and relocated to a much larger facility in southern Israel.
The move will bring Israeli-based SodaStream International Ltd. under American ownership, and give PepsiCo more points for moving to decrease the amount of plastic flowing into landfills and seas.