Cadbury acquires remainder of Dr Pepper/Seven UP
April 25, 2006
by Eric Schroeder
LONDON — In a move described by the company’s top executive as "strategically consistent, financially attractive and value enhancing," Cadbury Schweppes on Tuesday revealed plans to take control of the Dr Pepper/Seven Up Bottling Group, the largest independent bottler in the United States.
Cadbury, which already owns a 45% share in the bottler, said it would pay $334 million for a 53% stake from U.S. private equity firm Carlyle Group. Following completion of the transaction, Cadbury said it intends to purchase the remaining 2% of shares, held by management and employees, for $19 million.
Cadbury said the purchase strengthens route to market for the company’s U.S. beverage business, will increase its ability to leverage scale with U.S. retail customers and enhances revenue growth potential at the US beverages business.
"The acquisition is strategically consistent, financially attractive and value enhancing," said Todd Stitzer, chief executive of Cadbury Schweppes. "It gives us greater control over the distribution of our brands; improved operating efficiencies and customer service; and greater access to faster growing water and energy drinks."
Cadbury forecast the move would generate cost and revenue synergies of $120 million by 2010, half of which will be realized by 2008. The transaction is subject to regulatory approval in the U.S. and is expected to close in early May.
Upon completion, Dr Pepper/Seven Up Bottling Group will be integrated with Cadbury Schweppes Americas Beverages and will be known as Cadbury Schweppes Bottling Group.
Cadbury Schweppes also on Tuesday entered into an agreement in principle to acquire the assets of the All American Bottling Co., the third largest independent bottler in the U.S., for approximately $65 million. All American Bottling Co. had revenues of around $180 million in 2005 and distributed 2% of Cadbury Schweppes’ carbonated volumes in the U.S.
Over the past year Cadbury Schweppes has made a number of key disposals in addition to selling its Europe Beverages business, which included the Orangina and Oasis brands.