Private Equity Eyes Cadbury's U.S. Beverages, Shares Higher

The Daily Telegraph reported two private equity groups are preparing competing £8 billion ($15.8b) bids for Cadbury Schweppes' U.S. beverages unit (brands include Dr. Pepper, 7-Up and Snapple). Shares of Cadbury trading in London were last up 2.2% to 688 pence in morning trading. One private equity group consists of Blackstone Group, KKR and Lion Capital. A rival group includes Bain Capital, TPG and Thomas H. Lee. The Telegraph said Cott Corp. of Canada, the world's leading maker of generic-brand soda, may join one of the groups, but it is unclear which one. Reuters reports Cadbury has received around a dozen expressions of interest in its U.S. beverages unit, according to a source close to the matter. Compelled by activist investor Nelson Peltz, Cadbury hired Goldman Sachs, Morgan Stanley and UBS earlier this year to advise on strategic alternatives for its U.S. beverages unit. Blackstone and Lion Capital purchased Cadbury's European beverages unit in 2005 for £1.85b.

Sources: The Daily Telegraph, Reuters
Commentary: Cadbury Schweppes: Activist Holder Peltz is Moving Fast • Cadbury Schweppes: Peltz Stake Sparks Share Interest • Cadbury: A Deliciously Undervalued Stock
Stocks/ETFs to watch: Cadbury Schweppes (CSG), Cott (COT). Competitors: Coca-Cola (KO), PepsiCo (PEP), Hansen Natural (HANS), Jones Soda (JSDA), National Beverage (FIZ)

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