Cadbury Schweppes plc (London) is expected to announce the sale of its American beverage business, which includes 7-Up, Dr Pepper and Snapple, according to The New York Times.
Cadbury has received at least three bids for the U.S. beverage business: one from a group that includes Bain Capital Partners, Thomas H. Lee Partners and the Texas Pacific Group; a second from a group that includes the Blackstone Group, Kohlberg Kravis Roberts and Lion Capital; and a third from a group led by Cott Corp. (Toronto), which makes private-label drinks for retailers like Wal-Mart Stores Inc. (Bentonville, Ark.). Should the Cott bid be accepted, it would combine the world’s third- and fourth-largest drink makers into a single company, though one that would still lag far behind the industry leaders, The Coca-Cola Co. (Atlanta) and PepsiCo Inc. (Purchase, N.Y.).
Cadbury Schweppes Americas Beverages (Plano, Texas) includes the Motts, Clamato and Yoo-Hoo brands. It brought in 35 percent of the company’s total revenues last year.
Cadbury is expected to use the proceeds of the sale to bulk up its candy business. It has been speculated that it might try to acquire The Hershey Co. (Hershey, Pa.), though Hershey’s largest shareholder, the Hershey Trust Co., has thwarted takeover bids in the past, most recently a $12.5 billion merger with the Wm. The Hershey Trust also rejected a joint offer by Cadbury and Nestlé S.A. (Vevey, Switzerland) worth about $10.5 billion.
Conversely, said The Times, Cadbury’s confectionary business could become a buyout target, with analysts citing Kraft Foods Inc. (Northfield, Ill.) as a potential buyer.