Cadbury tries to buy Orangina from Pernod

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The Independent Online

CADBURY SCHWEPPES, the Dairy Milk to Dr Pepper giant, said yesterday it was in "preliminary discussions" with France's Pernod Ricard about the possible acquisition of Orangina and a handful of other soft drinks brands.

CADBURY SCHWEPPES, the Dairy Milk to Dr Pepper giant, said yesterday it was in "preliminary discussions" with France's Pernod Ricard about the possible acquisition of Orangina and a handful of other soft drinks brands.

Cadbury, which last week bought the US-based Snapple Beverage group for a cash consideration of $910m (£616m), is expected to clinch the Pernod assets for about £450m.

Shares in the UK company fell 1p to 400p as analysts described the rumoured price tag as "unrealistically high".

The deal with Pernod would increase Cadbury's slice of the soft drinks market in France from 5 per cent to 13 per cent, boosting it into second position behind Coca-Cola, which has a 59 per cent share. Alongside Orangina, the package of brands is likely to include Yoohoo chocolate milk and Pampryle fruit drink.

Martin Dolan, an analyst at Credit Suisse First Boston, said: "Strategically, Cadbury's position in Europe is not robust and sustainable. They need to do something about that." The Orangina acquisition would lead to cost synergies with Cadbury's existing Schweppes and Oasis businesses in France.

But another analyst warned: "The difficulty for Cadbury will be developing Orangina outside France, which Pernod Ricard was not able to do."

From Pernod's perspective, the proceeds from the disposal are likely to be used as firepower for its bid to acquire part of the spirits business being sold by Canada's Seagram. The French group has teamed up with Diageo to take part in the auction, which is expected to raise about $7bn.

This is Pernod's third attempt to divest its soft drinks business. Last November, French regulators cited competition concerns for blocking a FFr4.7bn (£455m) bid by Coca-Cola for the second time.

Separately, Cadbury's earlier plans to sell its European soft drinks business to Coca-Cola were also thwarted last year on competition grounds. Analysts say there are unlikely to be any anti-trust issues if Cadbury does launch a formal offer for Pernod's soft drinks portfolio.

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