Coke May be Interested in Snapple Iced Tea

NEW YORK – Coca-Cola Co. (KO) may be interested in acquiring Cadbury Schweppes Plc's Snapple iced tea, a trade publication reported Friday.

Citing several Coke executives, Beverage Digest reported that "Coke might be interested -- or in words of some, should be interested -- in buying Snapple to beef up its tea business."

Snapple, which sells flavored teas, lemonades and juice drinks, was the third-largest bottled tea brand in the first quarter, ahead of Coke's entire tea portfolio, which includes Nestea, Gold Peak and recently acquired Fuze, according to Beverage Digest data.

Coke spokesman Ben Deutsch declined to comment.

"Coke still needs to do work on its North American tea portfolio," said Beverage Digest publisher John Sicher. "Snapple, though it hasn't been growing recently, could make sense for Coke but there's no indication yet that the brand is for sale."

British-based Cadbury, the world's largest confectionary company, is getting ready to separate its drinks arm, which includes Dr Pepper, 7UP, Snapple and Hawaiian Punch.

Earlier this week, Chief Executive Todd Stitzer said a sale of the $15.9 billion North American business was more likely than a spinoff.

Sources familiar with the situation say at least two groups of private equity firms were bidding for the business.

Private equity firms generally fund their purchases with a lot debt, and often sell off underperforming units to help pay some of it down.

A Cadbury Americas Beverages spokesman said one of the strengths of Cadbury's drink business is its diverse portfolio.

"As consumers are looking for flavors and variety and alternatives to carbonated soft drinks, our portfolio makes us well-positioned with brands like Snapple, Mott's and Hawaiian Punch," said Cadbury spokesman Charles Alfaro.