Blog: Chris Brook-CarterSchwepped away

Chris Brook-Carter | 8 September 2005

Everyone appears to have already known it but, after months of speculation, Cadbury Schweppes finally got round to admitting it as well - its European soft drinks is  surplus to requirements.
A sale of the unit is expected to begin later this year and early estimates put a price tag of up to US$2bn on it.

The European beverage unit has looked like rather a spare part since 1998 when Cadbury failed to sell it to  Coca-Cola as anti-monopoly authorities blocked the path.
Those same competition concerns will keep Coke out of the  running this time round, and early indications seem to suggest that a series of private equity groups lead the  pack looking to down the liquid diet of Orangina, Schweppes and Oasis. Carlyle Group tops this list but  other names thought to be interested include PAI, Lion  Capital, Cinven and BC Partners.
All eyes, however, will be on PepsiCo to see if the US snack and soft drinks giant will mount a bid of its own.

Should Pepsi throw its hat into the ring, then the asking price could soar, given the synergies a buyer from within the drinks trade could muster out of such a deal.
For Cadbury, the sale represents an opportunity for greater financial and strategic freedom. While it will no doubt use proceeds to cut its debt, that freedom may  extend into acquisitions. Indeed, there are already noises it may use the capital to buy Carlyle’s share in the US  bottler of its Dr Pepper and Seven Up brands. It would be a neat end to a long drawn out process.


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