Cadbury announced last week that, pending shareholder approval, it would pay $1.7 billion to acquire the remaining 77% of Dr Pepper shares it doesn't already own. The merger was first proposed last fall.
The combined companies would have a U.S. market share of 16.6% behind Coca-Cola Co.'s 41.1% and Pepsi-Cola Co.'s 32.2%, said Jesse Meyers, publisher of Beverage Digest, Old Greenwich, Conn. Each will feed off the other's distribution strengths, Mr. Meyers said.
London-based Cadbury should receive a boost from Dr Pepper/Seven-Up's U.S. toehold; Cadbury's international power will extend Dr Pepper's reach abroad. The Pepsi-Cola Co. owns all 7UP business outside the U.S. Cadbury's brands include Canada Dry, Sunkist and Squirt.
"I don't think Coke and Pepsi have been staying up all week fretting over this," Mr. Meyers said, "but as an executive at one of the companies said, `Now all our enemies are under one roof.' "
More mergers and acquisitions in the competitive industry are likely, said Mr. Meyers, as midsize marketers like Royal Crown Cola Co. look for brands to broaden their portfolios and independents seek refuge in larger companies.
Agencies for the marketers said they were unaware of any immediate changes. Young & Rubicam, New York, handles the $70 million Dr Pepper account; Leo Burnett USA, Chicago, has the $35 million to $40 million 7UP business; and Foote, Cone & Belding, Chicago, handles most of the $35 million Cadbury account.