Coke to Scale Down Cadbury Drink-Brand Deal

Coca-Cola Co. on Monday bowed to European regulators and agreed to scale down its proposed purchase of drink brands from Britain’s Cadbury Schweppes.

The world’s largest soft-drink maker will now pay $1.1 billion for Cadbury brands such as Dr Pepper, Crush, Canada Dry and Schweppes in about 100 nations, after dropping European markets including Germany, Italy and Spain from the deal. The price is 40% less than the $1.85 billion reached in December involving more than 120 nations outside the U.S.

The loss of several large markets is another setback in Coke Chairman Doug Ivester’s push to cement his company’s lead worldwide over rival PepsiCo Inc., after a bid for Pernod Ricard’s Orangina brand in France. Coke and Cadbury’s proposal became stymied because of antitrust concerns in the European Union, Mexico, Australia, Belgium and other markets.

Even with fewer nations, the revised agreement would help Atlanta-based Coke expand sales in Britain, Mexico, Australia, Canada and other nations. Demand has slumped in some of Coke’s leading markets, such as Japan, Germany and Brazil.

The decision comes after EU Competition Commissioner Karel Van Miert chastised Coke for trying to bypass an EU antitrust review by filing the plan with national regulators only. Cadbury Chief Executive John Sunderland said problems had been mounting simultaneously with national officials.

Cadbury will keep its European drinks operations for the “foreseeable future” and may add to them through acquisitions, Sunderland said. He said he would not rule out a sale at a later stage.

Cadbury said it expects completion in most countries by July. It expects the sale to win clearance in Mexico, Australia and Britain later. The company is in talks with Mexican regulators, who rejected the sale in April.

Coke fell $1.19 to close at $66.81 on the New York Stock Exchange.