Dr Pepper Snapple Group Inc. (DPS), Plano, Texas, completed the licensing of certain brands to The Coca-Cola Co. following Coca-Cola's acquisition of Coca-Cola Enterprises' North American bottling business.
As part of the transaction, DPS received a one-time cash payment of $715 million before taxes, fees and other related expenses. The company expects to use a portion of the proceeds to support its ongoing share repurchase program.
"These agreements solidify Coke's support of the Dr Pepper trademark and the continued growth of both the brand and our flavor portfolio," said Larry Young, president and chief executive officer of DPS, in a statement. "Moreover, it increases the brand's presence on fountain, providing additional opportunities for millions of consumers to sample the brand each and every day."
Under the new licensing agreements, Coca-Cola will distribute Dr Pepper in the United States and Canada Dry in the Northeast where these brands were formerly distributed by CCE. In addition, Coca-Cola will offer Dr Pepper and Diet Dr Pepper in local fountain accounts formerly serviced by CCE and will include Dr Pepper and Diet Dr Pepper on its Freestyle fountain dispenser.
The new agreements have an initial term of 20 years, with 20-year renewal periods, and require Coca-Cola to meet certain performance conditions. Coca-Cola will continue to distribute Canada Dry, C'Plus and Schweppes in Canada.
Additionally, in certain U.S. territories where it has a manufacturing and distribution footprint, DPS will begin selling Squirt, Canada Dry, Schweppes and Cactus Cooler, which were formerly sold by CCE.