Saturday, April 14, 2007

Beverage David in hunt for a Goliath

Consumers often are understandably apathetic about who owns the companies that make what they drink.

Here's one instance, however, when it might end up making a difference in some products.

Cadbury Schweppes PLC recently announced it wants to divest itself of its beverage operations, valued at nore than $15 billion, a decision that has spawned endless speculation about who might want to buy that portion of the company.

The Cott Corp., headquartered in Toronto, is the latest and perhaps most viable suitor. The company has confirmed it is in talks with Cadbury Schweppes. If Cott takes over the C-S beverage division, it could become a viable rival to industry leaders Coca-Cola and Pepsi-Cola. Cott currently makes private-label soft drinks for such retailers as Wal-Mart.

"Cott ... is exploring the potential benefits of participating in possible industry consolidation," Cott said in a statement.

Cadbury Schweppes, which wants to concentrate on its candy operations, makes such drink products as DrPepper, 7Up, Sunkist, A&W and Canada Dry. Cott makes its own brand of beverages, as well as Royal Crown (RC) soft drinks and more than 200 different soft drinks, waters, energy drinks and the like under various retailers' names.

Such a takeover would alter the way such brands are marketed, and perhaps even change the packaging and contents with which consumers now are familiar.

Cott, much smaller than the C-S entity at an estimated $1 billion, is getting at least some short-term benefit from its announcement. The price of its shares rose a quick 25% Friday on the Toronto Stock Exchange to $18.44 after it confirmed it has taken part in "exploratory discussions."

Cott has been in a cost-cutting mode since Brent Willis took over as chief executive officer last summer.

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