CADBURY SCHWEPPES AND COCA-COLA COMPLETE $705 MILLION SOFT DRINKS BRANDS TRANSACTION IN 155 COUNTRIES
30 Jul 99
Cadbury Schweppes plc confirmed today that it has completed the transfer of its soft drinks brands in 155 countries to The Coca-Cola Company for a cash consideration of $705 million. This transaction is based on the terms of the amended $1.1 billion agreement announced on 24th May 1999 which remain unchanged. Further payments will be received as subsequent completions are made.
The regulatory review process will continue in a number of other countries of which the most significant are Australia, Canada, Mexico and New Zealand.
Both companies have now agreed it would be more appropriate for Poland, Hungary, the Czech and Slovak Republics to be retained for the foreseeable future as part of Cadbury Schweppes' European Beverages division.
Following today's announcement, approximately 175 Cadbury Schweppes' employees associated with these brands will join Schweppes Beverages, Coca-Cola's new business unit.
Separately, Cadbury Schweppes South Africa, in which Cadbury Schweppes has a 55% interest, has entered into discussions to sell its carbonated soft drinks business in South Africa to Coca-Cola.
John Sunderland, Cadbury Schweppes' Chief Executive, said: -
"We have secured a premium price for a substantial number of our beverages businesses. We will retain robust and profitable beverages operations in the USA and Europe and simultaneously broaden our strategic options for the future development of the company. We wish all employees transferring to Coca-Cola well for the future and thank them for their contribution to our business over the years".
Background
In December 1998, Cadbury Schweppes announced that it had agreed to sell its soft drinks brands outside the USA, South Africa and France to The Coca-Cola Company for $1.85 bn. The agreement included the Schweppes, Dr Pepper, Canada Dry and Crush brands and certain regional trademarks.
Subsequently, in May 1999, the two companies announced an amended agreement under which Cadbury Schweppes retained its soft drinks businesses in Western Europe, excepting the UK, Ireland and Greece. The consideration for the amended transaction, covering over 150 countries, was accordingly adjusted to $1.1 billion (from $1.85 billion).
Bottling and Other Assets
To support its soft drinks business in Continental Europe, Cadbury Schweppes is retaining the associated European bottling assets along with the concentrate plants at Athy in Ireland and Carcagente in Spain.
Financial Details of the Brands Transaction
The agreement with Coca-Cola covers trademark ownership for Schweppes, Dr Pepper, Canada Dry and Crush brands and certain regional trademarks outside the USA, South Africa and most of Continental Europe and all tangible and intangible assets associated with the brands in more than 150 markets.
The $705 million consideration relating to this proportion of the disposal comprises cash. Associated tax and expenses are estimated at $130m.
The value of the net tangible assets related to this part of the disposal was £3m at 2 January 1999. The operating profits in the financial year ended 2 January 1999 were £24m. The transaction is expected to be neutral to earnings in the first full financial year following disposal.
As before, Cadbury Schweppes' foods business of Cottee's in Australia, the Bromor business in South Africa and Mott's in North America are not part of this agreement.
Cadbury Schweppes plc: 020-7409-1313
http://www.cadburyschweppes.com
for
further information contact:
media enquiries
Dora McCabe
Head of Group Public Relations
Tel: +44 (0)20 7830 5127
Fax: +44 (0)20 7830 5137
contact Dora McCabe
general enquiries
investor enquiries
Sally Jones
Investor Relations Director/Finance Director Global Commercial
Tel: +44 (0)20 7409 5124
Fax: +44 (0)20 7830 5157
contact Sally Jones
David Kappler
Chief Financial Officer
Tel: +44 (0)20 7409 1313
