Cadbury to buy Orangina

June 6, 2001: 2:42 a.m. ET

UK drinks company to buy Pernod Ricard's soda brands for $595 million

LONDON (CNN) - Cadbury Schweppes said on Wednesday it was close to an agreement to buy Pernod Ricard's soft drinks business for $595 million.

The UK drinks and chocolate company, which last year bought Snapple Beverages of the U.S. for $1.45 billion, said the acquisition of Pernod's Orangina, Pampryl and Yoo-Hoo brands was conditional on approval from Orangina's unions.

"Our beverages operations are now clearly focused in profitable markets of North America, Continental Europe and Australia," Chief Executive John Sunderland said.

"Europe is our second-largest beverages market and has demonstrated strong profit growth over the last few years," Sunderland added.

The deal fulfills Pernod Ricard's plan to get rid of Orangina, which is profitable, but in need of a boost to fund the soft drink's international development.

French antitrust regulators scuppered Coca-Cola's (KO: Research, Estimates) two-and-a-half year efforts to buy Orangina in November. The deal would have increased Coke's share of the French soda market to 70 percent from 60 percent.

Pernod Ricard (PRI), which also produces Havana Club Cuban rum and Jacob's Creek wine, has been looking to focus on its wine and spirits business.

Orangina is France's second most popular soft drink and would enable Cadbury Schweppes to double its market share from under 10 percent to 19 percent.

Cadbury Schweppes (CRBY), the maker of Dr Pepper and Cadbury Creme Eggs, said it would buy Pernod's soft drinks brands in continental Europe, North America and Australia. The company also has an option to buy Pernod's brands in other regions.

The world's third-largest soft-drinks company said in February it expected to ink more deals in the confectionery and beverage industries. The company is in talks to buy La Casera, the Spanish soft drinks group, according to the Financial Times.