Cadbury Sells Beverage Unit to Two Firms

Cadbury Sells Beverage Unit to Two Firms

Cadbury Sells Beverage Unit to Two Firms

LONDON, Nov. 21 - Another set of well-known brands was snapped up by private equity buyers on Monday when Cadbury Schweppes agreed to sell its European beverages unit, including the Orangina and Schweppes soft drinks, for 1.85 billion euros ($2.2 billion).

Lion Capital and the Blackstone Group will take control of Orangina, a pulpy, bubbly orange drink popularized in the early 1970's. The two groups will also buy the Schweppes line in Europe. Schweppes's founder, Jacob Schweppe, first distributed carbonated mineral water from a London factory in 1790.

Also included in the sale are regional soft drinks like the Pampryl juice brand in France and La Casera, a Spanish producer of a carbonated lemonade that is mixed with wine or beer. The Schweppes brand soft drinks will continue to be produced and sold by Cadbury in the United States, Australia, Mexico and Canada.

The sale allows Cadbury to concentrate on its confectionary business in Europe and its American soft drink brands, which include 7Up and Dr Pepper, the company said. It will use the proceeds to reduce the group's net debt, which was £4.3 billion ($7.8 billion) in June.

Cadbury has struggled for growth in its drinks business in Europe, even after committing cash to buy brands. It tried and failed to sell all of Schweppes in 1999. For the fiscal year ended in January, the European drinks group had £653 million in sales ($1.2 billion), down 5.6 percent from the year before, and operating profit of £116 million.

"We bring a real focus on the business," Lyndon Lea, a partner at Lion Capital, said. "We want to spend more" on the brands, he said. The group will be run as a stand-alone business, with Javier Ferran, a Lion Capital director and former Bacardi Group executive, as chairman. Blackstone and Lion Capital are taking equal stakes in the business.

The two private equity groups beat out rivals by offering slightly more than market expectations, and having the financing in place to do the deal quickly. Lion has taken control of other consumer brands in the past, including Jimmy Choo shoes and Perrier Jouët Champagne.

The deal needs the approval of European regulators and employee representatives in France, Germany and Belgium. Lion expects the transaction to close early next year.