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Stronger rival if Cott merges with Cadbury Schweppes


March 31, 2008
By Canadian Vending

Trading in Cott Corp. shares was halted April 13 after the Wall Street
Journal reported the Canadian soda pop maker is in talks with
private-equity investors about a merger with Cadbury Schweppes’s
beverage division.

Trading in Cott Corp. shares was halted April 13 after the Wall Street Journal reported the Canadian soda pop maker is in talks with private-equity investors about a merger with Cadbury Schweppes’s beverage division.

A merger with Cadbury Schweppes would create a major rival for Coke and Pepsi, third among the titans of the carbonated beverage world.
 
The deal, which would come as no surprise as it has been discussed in the industry for several years, would almost certainly annoy Coke and Pepsi.
 
Cadbury announced plans to split its business last month and private-equity firms are considering bids for Cadbury’s drinks division.
 
Toronto-based Cott, which has seen its stock drop 12 per cent this year, has been closing factories and restructuring to reduce costs amid falling demand for carbonated soft drinks.
 
Cott had a market value of $1.1 billion CDN prior to the halt of trading. Cadbury’s drinks business is expected to be valued at as much as $15.8 billion US, when divested from Cadbury’s candy brands this summer.
 
Cott, unlike other beverage companies, has two methods of delivery: directly to retailers, a system favoured by soda brands that sell large volumes; and to warehouses for distribution to stores, a system more suited to niche brands.
 
As of press time, no further information had been released.

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