Tatas in race for Cadbury business

The Tata group is back to deal making in the US beverage market. The salt-to-software group is likely to submit a bid for Cadbury Schweppes’ US beverages business in an attempt to capture the hugely-successful Snapple range of fruit, diet drinks and iced teas.

The group is in talks with private equity funds which are interested in the beverages business and could join US giant Blackstone, Lion Capital as a minor partner in their consortium. The UK-headquarted Cadbury Schweppes is looking to offload the US beverage business as part of a global restructuring that will separate confectionery and beverage businesses.

The audacious move is part of the Tata group’s efforts to emerge as a big global player in its key businesses.Tata Tea has been expanding its portfolio and diversifying its product range in order to insulate itself from sluggish growth in core businesses like tea and coffee. In the past two years, the company has bought specialist tea maker Good Earth and coffee firm Eight O’ Clock Coffee in the US, before making an attempt for Glaceau, the maker of enhanced water products such as vitamin water and smart water.

The Tata group is not interested in the entire beverages portfolio which also includes brands like Dr Pepper. It is keen on Snapple though, a 35-year-old brand launched in the Greenwich village area of New York by three childhood friends in 1972. If the Blackstone consortium emerges as winner, the Tata group wants the right to carve out Snapple and make it a part of its portfolio. The group’s financial exposure in the deal is estimated to be just over $2 billion, which could be funded by own funds and some borrowings.

(Source: Economic Times)