Asahi to get Schweppes for $1.2b after Coca-Cola steps aside
The Coca-Cola Company has decided against pursuing a counter offer for Schweppes, paving the way for Cadbury’s A$1.185 billion deal with Asahi Breweries to proceed.
Cadbury announced last night that they had entered into a definitive sale and purchase agreement for the Schweppes Beverages business in Australia. A conditional agreement between the firms was completed on December 24 last year, but remained subject to a right of negotiation granted to The Coca-Cola Company in 1999 – under which TCCC had the right until March 2009 to negotiate with Cadbury regarding a potential acquisition of the Schweppes Australia business. This right was granted to TCCC after a takeover bid for Schweppes failed to gain regulatory approval in 1999.
“TCCC has confirmed to Cadbury that it does not intend to pursue its right of negotiation and consequently, Cadbury and Asahi have today entered into a definitive sale and purchase agreement for the same cash consideration as previously announced,” the UK-based confectioner advised.
Schweppes is the second largest non-alcoholic ready to drink beverages business in Australia and its portfolio consists of both owned and franchised brands, including Schweppes and Pepsi. It has around 1,500 employees.
“The successful sale of Schweppes Australia will complete Cadbury’s divestment of its beverage operations,” Todd Stitzer, CEO of Cadbury, said upon first announcing the deal. “As a result, Cadbury will focus solely on growing its Chocolate, Gum and Candy portfolio in line with the Vision Into Action strategy, announced in June 2007.”
Asahi is Japan’s second largest brewer and the deal continues a trend of expansion by Japanese companies into the Australian and New Zealand beverage market. Kirin started the trend amongst Japan’s beverage firms to expand into the region as their home market growth stagnates, with Kirin now owning Dairy Farmers and National Foods as well as a major stake in Lion Nathan, while Suntory recently completed a purchase of the NZ-based Frucor.
“The acquisition of Schweppes Australia will strengthen our international soft drinks business, create a new platform of growth in Australia, and enable us to capture synergies the Group,” Asahi advised in a statement.
Cadbury said they expected that the pre-conditions to closing the transaction will have been satisfied by 30 April 2009, with the deal having already received approval from the Australian Foreign Investment Review Board.