Acquisition of company

Cadbury Schweppes has announced it will take over the remaining 55% stake in the Dr Pepper/Seven Up bottling group (BG) for the price of $353 million.

"The acquisition is strategically consistent, financially attractive and value enhancing. It gives us greater control over the distribution of our brands; improved operating efficiencies and customer service; and greater access to faster growing water and energy drinks," Todd Stitzer, CEO of Cadbury Schweppes said.

The bottling group will be integrated with Cadbury Schweppes Americas Beverages (CSAB) and will be known as Cadbury Schweppes Bottling Group (CSBG).

The acquisition is expected to enhance the company's underlying earnings in 2006 and exceed their weighted average cost of capital in 2008. Value creation will be driven through a combination of cost and revenue synergies which are expected to reach $120 million by 2010.

The transaction is subject to regulatory approval in the US and is expected to close in early May.

The integration of the company's will:

• Consolidates the manufacture and distribution of the company's beverage brands into three scale systems - company-owned, Coke bottlers and Pepsi bottlers;
• Enable the company to more effectively leverage our broad brand portfolio by simplifying our interactions with our retail customers;
• Enhances their revenue growth by providing the additional funds to re-invest in core beverage brands, notably Dr Pepper, and in accessing under-exploited higher margin convenience channels.

Gil Cassagne, currently President and CEO of CSAB, will run the combined business. Larry Young, currently CEO and President of the BG, will become Chief Operating Officer of CSBG reporting to Gil. His responsibilities will cover the supply chain for the region and the operation of BG.