Snapple Sale Leaves Triarc Cos. As a Restaurant Pure Play

Paring down to a core of restaurant businesses, Triarc Cos. sold its Snapple Beverage Group to Cadbury Schweppes PLC for $1.5 billion, including $420 million in debt. The sale included the Stewart’s and Mistic drink brands plus the Royal Crown, RC Edge, Nehi, and Diet Rite Cola soft drink concentrates businesses. The sale replaced Triarc’s planned IPO of its beverage operations. Snapple Beverage Group had 1999 sales of $772 million, or about 80% of Triarc’s total revenue. The deal will bolster Cadbury’s presence in the U.S. beverage market. Cadbury, which owns 7-Up and Dr Pepper, is the third-largest player in U.S. soft drinks market, behind Coca-Cola Co. and PepsiCo Inc. Triarc will continue to operate the Arby’s, T.J. Cinnamons, and Pasta Connection restaurant businesses. The company, which was emerging from a restructuring when it acquired Snapple in 1997, once had interests in liquefied petroleum gas, dyes, and specialty chemicals, in addition to its beverage and restaurant operations. Although the transaction includes more than just Snapple, the price is three times more than what Triarc paid Quaker Oats Co. for the Snapple brand. The sale adds an ironic postscript to the short, troubled alliance of Quaker Oats and Snapple, which ended with Quaker swallowing a huge loss to unload the ailing drinks business. Quaker had paid $1.7 billion to buy Snapple in late 1994 and fetched a mere $300 million in selling it to Triarc – one of the biggest losses in disposing of a failed acquisition. Cadbury had passed on the opportunity to acquire Snapple in 1997, saying that the $300 million price was too high. Commenting on his company’s turnaround of Snapple, Nelson Peltz, Triarc’s chairman and CEO, said that he thinks Snapple is and was a great brand. “I had always believed that Quaker did not overpay for Snapple; it just never quite treated the brand properly.” He believes that Snapple’s decline under Quaker was due to mismanagement, not the brand itself. Triarc was able to resuscitate Snapple, he said, through expert management, revamped advertising campaigns, and product line extensions, including WhipperSnapple smoothie drinks. Peltz added that the sale of Snapple Beverage Group would leave Triarc with a strong cash position, and that the company would evaluate options for the use of the sale proceeds. “Our goal is to continually create value. We have a history of doing that, and we expect that we will do that again.”