Beating competition from private equity groups including Permira and PAI, The Blackstone Group and Lion Capital are poised to acquire the European beverage division of Cadbury Schweppes (CSEB) in a deal valuing the business at €1.85 billion.
In a statement, the two firms described themselves as committed to buying the asset following the completion of a “communication and consultation process with employee representatives”. Blackstone and Lion expect the deal to close in early 2006.
The two firms, which earlier this year teamed up for an ultimately unsuccessful attempt to acquire UK drinks groups Allied Domecq, plan to own the Cadbury portfolio as equal partners.
A Lion spokesperson declined to disclose any details regarding the capital structure that will be put in place.
According to a source close to the deal, a debt package equivalent to just over 7x CSEB’s 2005 EBITDA has been arranged to finance the purchase.
Post-closure, Blackstone and Lion will own a portfolio of brands including Schweppes, Orangina, Oasis and TriNa. The division has roughly 3,000 staff. 2005 sales are expected to come in at approximately €1 billion.
Javier Ferran, a former CEO at Bacardi, the spirits maker, who joined Lion Capital as a director earlier this year, will serve as CSEB’s chairman. A source close to Lion said the new owners would focus on achieving top line growth, whilst also looking at potential cost reductions.
The deal bolsters Lion’s reputation as an investor in branded consumer goods. Lyndon Lea, founding partner, commented: “These brands are leaders in their categories with unique points of difference due to their fruit-based nature which is on trend from a secular perspective. We look forward to working with the management to invest and develop the brands in their core territories.”
NM Rothschild and JPMorgan acted as financial advisors to Lion and Blackstone. Debt is being provided by JPMorgan, Citigroup and Bank of America. Cadbury Schweppes was advised by Goldman Sachs.