Coca-Cola to Buy Orangina
Coca-Cola Co. on Monday said it plans to buy Orangina, the sparkling orange soft drink made by France’s Pernod-Ricard, for about $840 million.
The world’s largest soft drink maker said it would acquire four bottling and concentrate plants in France as part of the deal, which would add a leading soft drink in France to Coca-Cola’s stable of international brands such as Coke, Sprite and Fanta.
Orangina, which is carbonated but less sweet than Fanta, has been a strong rival to Coke in France.
The acquisition by Coke would mark the first major transaction by Douglas Ivester, who took over as chairman and chief executive two months ago, following the death of legendary Coke chief Roberto Goizueta.
Analysts said the move would be an example of Ivester’s desire for the beverage company to be a major player in all segments of the nonalcoholic beverage market, from orange drinks to root beers.
Currently, Orangina has only a minute following in North America but has been very popular in France for years. Orangina contains orange juice and pulp and is sold most often in 10-ounce bottles.
Orangina has an annual worldwide case volume of about 53 million cases, including 1.5 million cases sold in the United States each year. About 80% of the soft drink’s volume is sold in France and Britain.
In addition, Orangina could give Coke a weapon against archrival PepsiCo Inc., which reportedly plans to introduce an orange-flavored Slice soft drink next year.
In New York Stock Exchange trading, Atlanta-based Coca-Cola shares rose 63 cents to close at $66.06; Pepsi shares rose 25 cents to $35.13. American depositary receipts of Pernod-Ricard fell 25 cents to $13.13.
Pernod-Ricard will use proceeds of the sale to finance the international expansion of its Pernod and Ricard alcoholic anise and Wild Turkey bourbon with the sale’s proceeds, the companies said.
Coca-Cola sees Orangina as well worth the price, Coca-Cola Vice President Randy Donaldson told Reuters.
“We think Orangina has the good potential to be developed in many countries around the world,” he said when asked about the purchase price.
Industry analyst Emanuel Goldman, of PaineWebber in San Francisco, said the sale of Orangina by Pernod-Ricard was a solid business decision.
“Orangina was a fish out of water for Pernod-Ricard,” he said. “Their business is alcoholic beverages. Orangina really does not fit the company. What do you do with a fish out of water? You throw it back. In this case, it’s going to someone else’s pond.”
Pernod-Ricard bought the international rights to the fizzy orange drink, which was first introduced in 1936, in 1981 and acquired the brand’s French rights in 1984.
