Cadbury acquires big chunk of U.S. soft-drink market

September 10, 1993|By New York Times News Service

For the second time in two weeks, Britain's Cadbury Schweppes PLC has bought a sizable piece of the U.S. soft-drink industry.

The maker of Canada Dry and Schweppes sodas said yesterday that it had agreed to acquire A&W Brands Inc. of White Plains, N.Y., which makes the country's leading brands of root beer, cream soda and several other noncola soft drinks.

The companies said the deal, if approved by A&W shareholders and antitrust regulators, would have Cadbury pay $24.50 for each of A&W's nearly 13.7 million shares, for an overall cost to Cadbury Schweppes of about $335.6 million.

"It's a marriage made in heaven," said Roy D. Burry, an analyst at Kidder, Peabody. "Cadbury Schweppes can use the help in the U.S., and A&W can use Cadbury's power to get into new markets abroad."

In Nasdaq trading yesterday, A&W soared $4, to $24.25. On the New York Stock Exchange, Cadbury gained 25 cents, to $28.875.

On Aug. 30, Cadbury spent $231 million to increase its holding of the Dr Pepper/Seven Up Companies from 5.9 percent, to 25.9 percent. With A&W, Cadbury would have a stake in 16.2 percent of the $47 billion U.S. soft-drink market. Cadbury's own share was 3.4 percent; A&W's, 2.2; and Dr Pepper's, 10.6.

Though Coca-Cola and Pepsico control 70 percent of the domestic market, Cadbury would gain leadership in a variety of niche markets and fourth place overall, behind Coca-Cola, Pepsico and Dr Pepper.

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