Cranberry farmers to harvest cash as Ocean Spray hopes for wave of bids

Ocean Spray, the Massachusetts-based soft drinks operation famous for its cranberry juice, has appointed Morgan Stanley to consider offers for the business which are expected to value the company at up to $1bn (£587m).

The juice business is a farmers' co-operative controlled by more than 900 American cranberry and grapefruit growers. A decision on its future is expected to be taken at a special meeting next month. The company's board set out the possible strategic options for the business to its owners on Thursday.

Ocean Spray, which was the subject of a television advertising campaign starring the Duchess of York, is attracting the interest of some of the world's biggest soft drinks groups, including Coca-Cola and PepsiCo.

Morgan Stanley declined to comment and Ocean Spray did not return calls.

One banker monitoring the situation with a view to making an offer for the business said: "A Coca-Cola or a PepsiCo will be interested because Ocean Spray helps with their move away from carbonated soft drinks to more healthy juices."

It is thought that the favourite option among the Ocean Spray board is selling a 49 per cent stake to a strategic partner who will help develop the brand and bring global distribution. The Ocean Spray business generates sales of $1bn but analysts believe it could expand significantly as the popularity of cranberry juice grows around the world.

Cadbury Schweppes bought the small Nantucket Nectars fruit juice business from Ocean Spray last year but it is thought unlikely to bid for Ocean Spray. It has since acquired the Adams confectionery business in the US and Todd Stitzer, the chief executive of Cadbury Schweppes, has said he intends to improve the performance of the company's soft drinks business before considering its options for the operation.

Ocean Spray employs 2,000 people and was formed in 1930 by three cranberry growers. Florida grapefruit growers joined in 1976. Bankers believe the farmers are likely to vote for a corporate restructuring which would see the licence to distribute the Ocean Spray range transferred to a new company. This would sell a 49 per cent stake to a larger soft drinks business which would then have the rights to the brand around the world. The farmers' remaining 51 per cent may be floated.