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Coke, Cadbury face hurdle
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April 9, 1999: 3:38 p.m. ET
Germany joins others in opposing ties; companies say they'll offer revisions
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NEW YORK (CNNfn) - Coca-Cola Co. and Cadbury Schweppes PLC officials moved quickly to appease investor concerns Friday that their proposed $1.85 million merger might fizzle under mounting international opposition.
Reacting to word the German cartel office would join Australian and Mexican officials in opposing the proposed union, Coke and Cadbury officials both proclaimed themselves willing to revise the offer to help meet jurisdictional concerns.
In fact, the two companies already have submitted a revised acquisition plan to Australian officials, who vowed Thursday to oppose the deal out of concern it would give Coca-Cola too much power in the country's soft drink market, said Mark Preisinger, a Coke spokesman.
"People have assumed that what occurred [Thursday] was a done deal," Preisinger said. "That's just not the case. We stand ready to negotiate."
Coke and Cadbury officials wouldn't comment on what the revised plans entail, but industry experts said the companies likely would be willing to exclude certain Cadbury products from the transaction in certain markets.
"Coke and Cadbury anticipated there would be problems," said one industry official who asked not to be named.
Cadbury is currently the world's number three beverage company, selling its soft drinks in 162 countries. Its popular brand names include Canada Dry, A&W and Squirt.
Hoping to focus its resources more closely on its growing confectionery business lines, Cadbury agreed in December to sell its non-U.S. beverage lines in 120 countries, including the Schweppes, Canada Dry, Dr Pepper and Crush product lines, to Coca-Cola.
Coke estimated it could grow the Cadbury brands, which currently sell about 600 million 8-ounce cases a year in those markets, at roughly 8 percent a year.
Analysts believe anywhere from six to 10 countries ultimately will object to the deal because Coke already controls a dominant share of their soft drink market. In Germany, for example, cartel officials noted while Schweppes' market share is relatively small, Coke already dominates more than 50 percent of the soft drink market there.
Still, there is little concern at this point that such objections might derail the entire deal.
"This isn't surprising," said Skip Carpenter, an analyst with Donaldson Lufkin & Jenrette in New York, of Germany's objections. "I don't think you have a deal breaker at this point. The large bulk of this deal will go forward, probably in the third quarter."
Investors weren't quite as confident. In mid-afternoon trading, Coca-Cola shares were down 13/16 to 60-1/16 while shares of Cadbury's American Depository Receipts were down 1/2 to 56-3/4. 
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