Blog: Cadbury looks sweet after drinks sales
Olly Wehring | 24 November 2005
Having confirmed as recently as September that it was looking to offload its European Beverage unit, Cadbury Schweppes confirmed this week that it has sold its business to a consortium led by Blackstone Group International and Lion Capital LLP for EUR1.85bn (US$2.17bn).
Although this sale had been widely expected prior to Cadbury Schweppes’s official confirmation almost three months ago, the speed in which a buyer has been found impressed even the company’s CEO. “I am delighted that within such a short time we have achieved a firm offer for Europe Beverages,” Todd Stitzer said. And with estimates early this year pricing the unit at US$2bn, Stitzer was also suitably “delighted” at what he got for it.
The price, at around 9.5 times the unit's forecast EBITDA for 2005, is just ahead of many analyst estimations and above recent transactions in the soft drinks sector - the UK soft drinks group Britvic is expected to float next month at 7.5 times.
However, the threat as late as last week that PepsiCo might enter into the fray and drive the asking price up will surely mean Blackstone/Lion will settle for what they had to pay for such a quick deal. The questions now are what next for Cadbury and how will Blackstone/Lion fair with its new purchase?
Lyndon Lea, founding partner of Lion Capital, the former European arm of US-based Hicks Muse Tate & Furst, believes the acquisition will close early next year. And she was quoted saying she expected to hold on to the company for three to five years, investing in marketing and innovation – all good news for the brands and the sector.
Cadbury, meanwhile, is now free to pay down some of its debt and concentrate on its more successful confectionary and Dr Pepper/Seven Up businesses. However, the divestment of the under-performing European subsidiary may now make it more attractive to potential takeover attempts - commentators are already suggesting the mighty US group Kraft may take an interest.
Whisk(e)y companies spend a lot of money and effort ageing their products for that premium taste....
PepsiCo created a stir last week with the news it is testing a product called Caleb's Kola, with some in the media claiming it was the beginning of a new “craft soda” category....
SABMiller's bid to widen the appeal of beer is very much in evidence at its latest 'House of Peroni' - with beer cocktails and a bigger bottle for the Italian lager brand on offer. ...
Here's a round-up of the big stories on just-drinks last week, featuring PepsiCo, SABMiller, the Scotch whisky category and the US wine market....
- Analysis - Remy's Cognac "dead-cat bounce"
- Comment - How Hand-Made is Tito's Handmade Vodka?
- Heineken to stay "active player" in beer M&A - CFO
- Focus - Pernod Ricard's Q1 sales by brand
- Diageo's future brighter than present suggests
- Moët Hennessy unveils first Travel Retail outlet
- United Spirits sees Q1 net loss
- Beam Suntory, Edrington part ways in Travel Retail
- Smirnoff Ice gets India launch
- Pernod Ricard sees sales lift in Q1