EU clears Cadbury Schweppes drinks sale
Schweppes' European drinks arm by private equity consortium Lion
Capital and Blackstone.
UK-based Lion Capital and US-based Blackstone signed a deal last November to buy the under-performing European soft drinks division, which includes Orangina, Oasis and Schweppes brands, for £1.2bn.
Cadbury said at the time it hope to get the deal past competition authorities by early 2006 so that it could use the proceeds to pay off some of its £4.3bn net debt.
"Following completion of the deal, we will be able to focus on our faster growing confectionery and other beverage businesses," said Cadbury chief executive Todd Stitzer.
The group will hang on to its high cash-generating US drinks arm, including Dr Pepper, Sunkist and 7 Up brands.
Analysts have long touted private equity as a likely suitor for Cadbury's European drinks business, with Coca-Cola ruled out due to the resultant market competition fears and PepsiCo only showing limited interest.
The problem for Lion Capital and Blackstone will be what to do with the division going forward.
Like-for-like sales fell one per cent in the first half of 2005, while the firm lost market share across its key markets of France, Spain and Germany in 2004.
"Private equity firms don't hold things forever, they always need an exit plan," said one analyst to www.BeverageDaily.com, adding it was possible the division would be broken up.
Yet, the business is still generating a fair amount of cash and chief executive Stitzer pointed out that "Europe beverages has a great portfolio of brands".
The division, with its sales volume of around 1.7bn litres, is also the third biggest player on Europe's carbonated drinks market; though the top two, PepsiCo and Coca-Cola, are barely visible on the horizon with more than three quarters of the market locked up between them (Coke has around 50 per cent, Pepsi around 18 per cent).
