Cadbury Schweppes Acquires Snapple Line
Cadbury Schweppes, the British company known for its bubbly tonic water, agreed Monday to buy the Snapple line of tea and juice drinks from Triarc Cos.
The beverage and candy maker would also add Royal Crown, Diet Rite and Nehi to its roster of carbonated soft drinks led by 7-Up and Dr Pepper under the deal announced Monday with Triarc, based in New York.
That would boost Cadbury’s share of the $58-billion U.S. market for carbonated beverages by about 1.2 share points to about 16% but still leaves it a distant third behind Coca-Cola Co. and Pepsi-Cola Co.
Cadbury executives told analysts that the sales of soft-drink alternatives are growing at a 9% clip in the U.S. compared with 1% for colas and 6% for flavored carbonated sodas.
Cadbury agreed to pay Triarc $910 million in cash for the Snapple Beverage Group. Triarc had announced in June it planned to sell a 20% stake in its soft-drink business in an initial public offering later this year.
The new plan pleased investors, who pushed Triarc shares up 75 cents to $25 on the New York Stock Exchange. Cadbury’s American depositary receipts closed off 13 cents at $22.38 on the NYSE.
As part of the deal, Cadbury would also assume $420 million in debt and would pay about $120 million for options held by Snapple employees after the sale is completed, possibly as early as November pending regulatory approval.
Cadbury expects to realize $500 million in cost savings by driving harder bargains with suppliers and eliminating duplicative back-office operations. It said it was too soon to say whether there would be job cuts.
The sale follows a major turnaround for Snapple under Triarc.
Triarc bought Snapple in 1997 for about $300 million from Quaker Oats Co., which stumbled badly with Snapple after paying $1.7 billion for it three years earlier.
Quaker had alienated many of the distributors that had helped make Snapple one of the hottest brands of the early part of the ‘90s, and sales were skidding.
But Triarc repaired distributor relations and Snapple sales have been growing for the past 11 quarters.
The Snapple group had sales of $772 million last year.
