It's not easy being #3
Cadbury Schweppes recently announced it would sell of its European drinks business to a couple of private equity groups (Lion Capital and the Blackstone Group) for $2.2 billion. The company is #3 in the market segment, just as it is in the US.
The problem is that the soft drinks business is much smaller in Europe, and, in countries like France and Germany where Cadbury Schweppes is big, it's rather stagnant. That, and the whole market is more competitive than in the US, where the big three (including Coke and Pepsi) dominate.
The company had tried to sell off the drinks brands in 1998 to Coca Cola, but was stopped by European antitrust authorities.
On the other hand, the confectionary business is doing quite well for the company, which is overall #1 in the world. Its purchase of assets like Trident and Dentyne from Pfizer in 2002 has been a big success.
Contrary to rumor, Cadbury execs insist they won't sell their US drinks business, including 7UP, Doctor Pepper, Snapple, Canada Dry, and other brands..
Of course, other rumors are rife that the company is just positioning itself for yet another sell off, yet another case of a deal leading to another deal. According to an article in The Scotsman ("Cadbury agrees sale of Europe drinks arm", 11/22/05):
But analysts said a streamlined UK group focusing on Cadbury chocolate and Adams gums, together with Dr Pepper and 7UP drinks in North America, may become a more attractive target for US predators such as Kraft Foods or Hershey.
