Pepsi linked to Cadbury sale
The owner of Pepsi cola was today reported to have entered the battle for ownership of the European drinks arm of Cadbury Schweppes.
US soft drinks firm PepsiCo is understood to have asked for information on the unit that makes Oasis and Orangina ahead of the first round of bidding next month.
According to the Financial Times, PepsiCo may face competition from more than a dozen buyout firms on both sides of the Atlantic in one of the autumn’s most hotly contested auctions.
A number of UK private equity houses are also believed to be interested in the £1.1bn (€1.6bn)-valued business, among them Apax Partners, Permira, CVC Capital and BC Partners.
Cadbury put its Europe Beverages division up for sale at the start of this month so it could focus on its confectionery arm and drinks business elsewhere in the world.
Disposal of Europe Beverages, which also makes the Spanish drink La Casera and the Schweppes range of mixers, will enable the company to cut its debt, which stood at £4.3bn (€6.3bn) at the end of June.
Today’s report said Coca-Cola was unlikely to bid because an attempt to snap up some of Cadbury's European drinks brands in 1999 was blocked by anti-trust authorities.
The Cadbury unit’s sales volume of 1.7 billion litres makes it the third largest player in the European carbonated soft drinks market.
Revenues from the Europe Beverages business totalled €962m in 2004, with around 85% of this generated in France, Germany and Spain. The unit also markets products in parts of North and West Africa and the Middle East.
A small proportion of sales are generated in the UK because Cadbury sold the bulk of its drinks business in this country to Coca-Cola six years ago.
Underlying profits in the Europe Beverages division were €171m last year, representing 11% of the total surplus generated by Cadbury as a whole.
Cadbury is willing to offload the unit because its growth has lagged other parts of the business – evidenced by a 1% fall in like-for-like sales at the half-year stage compared with a 7% improvement at its confectionery arm.
The sale process, which is being handled by investment bank Goldman Sachs, comes at a time when many large consumer goods and putting fringe businesses up for sale.
Unilever revealed a week ago that it is considering its options for Birds Eye and other European frozen food operations.
The past few days has also seen Heinz announce that it wants to sell its frozen and chilled food business, which employs 2,300 workers in the UK and Ireland.
