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With Canada’s Cott Corp. (COT) reportedly one of at least three groups that submitted bids before last Friday’s deadline to buy Cadbury Schweppes Plc’s American beverage division, these suitors and the market are eagerly awaiting an announcement expected on Tuesday.

If the company unveils that it is in fact splitting its confectionery and drink businesses, UBS Securities thinks an auction process is the most likely outcome for the latter.

Cott shares have fallen substantially in the past two months, and could suffer more if the company is left out of a deal with Cadbury, according to UBS analyst Kaumil Gajrawala. This could present a buying opportunity.

The reduction of new store openings for Wal-Mart, commodity price inflation and speculation that Cott will not be involved in a Cadbury deal have helped drive the stock down more than 10% from its peak, he said in a research note.

Nonetheless, Mr. Gajrawala is optimistic with a “buy” rating and US$19.50 price target for Cott shares. This is down US50¢ from his previous target, but it is in isolation of any potential deal.

He considers Cott in the midst of a multi-year turnaround supported by new customer wins, business in new areas, operational improvements, cost savings and new product launches.

FP Trading Desk

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