Dr Pepper Snapple Group licenses certain brands to PepsiCo
March 2, 2010
Dr Pepper Snapple Group Inc. (DPSG), Plano, Texas, completed the licensing of certain brands to PepsiCo Inc. following PepsiCo's acquisitions of The Pepsi Bottling Group Inc. (PBG) and PepsiAmericas Inc. (PAS). As part of the transaction, DPSG received a one-time cash payment of $900 million before taxes and other related fees and expenses. The company used a portion of these proceeds to reduce its total debt obligations to $2.55 billion.
"Having achieved our capital structure target less than two years after going public, and with a focus on growing the business organically, we are now committed to returning excess cash to shareholders over time," said Larry Young, DPSG president and chief executive officer, in a statement. "We're excited to be working with PepsiCo and are confident in our continuing ability to generate strong cash flows."
Under the new licensing agreements, PepsiCo will distribute Dr Pepper, Crush and Schweppes in the U.S. territories where the brands were distributed by PBG and PAS. The same will apply for Dr Pepper, Crush, Schweppes, Vernors and Sussex in Canada, and Squirt and Canada Dry in Mexico. The new agreements will have an initial term of 20 years, with 20-year renewal periods, and will require PepsiCo to meet certain performance conditions.
In addition, in U.S. territories where it has a manufacturing and distribution footprint, DPSG will begin selling certain owned and licensed brands, including Sunkist, Squirt, Vernors and Hawaiian Punch, which were previously distributed by PBG and PAS.