Pepsi will buy household drink-machine maker SodaStream for $3.2bn as it battles chief rival Coca-Cola for an edge in the health-conscious beverage market, in what some say was paying way too much for the company.

Founded in the UK in 1903, SodaStream was a coveted device in British kitchens in the 1970s and 80s, allowing customers to create fizzy drinks by adding flavored syrups to carbonated water, but it faded in popularity as soft drinks became cheaper.

The Israel-based company now focuses on turning water into sparkling water to tap into a trend towards younger and more health- and environmentally-conscious consumers.

Pepsi will pay $144 per SodaStream share in cash, representing a 10.9% premium to Friday’s closing price of SodaStream’s US-listed stock and a 32% premium to its 30-day average.

Pepsi said the transaction, which has been unanimously approved by both firm’s boards and is expected to close by January 2019, is another step in its bid to “promoting health and wellness through environmentally friendly, cost-effective and fun-to-use beverage solutions.”

Speculation about Pepsi or Coca-Cola buying SodaStream has bubbled for years. The company had marketed itself as a more environmentally friendly alternative to mainstream bottled drinks and therefore a threat to the giant producers.

Coca-Cola and Keurig Green Mountain forged a partnership in 2015 to market a counter-top cold drinks machine, but pulled the plug the following year after it failed to take off.

But the notion of creating soft drinks at home has had limited success. Over the years, many users have used SodaStream only for making fizzy water, without the flavored syrups it sells.

Pepsi said its strong global distribution capabilities would position SodaStream for further expansion.

SodaStream was in the spotlight several years ago when critics called for a boycott over a factory it had in the West Bank, despite employing many Palestinians. It has since closed that factory and relocated to a much larger facility in southern Israel.