Dr Pepper Snapple Group Inc. has agreed to license certain brands to The Coca-Cola Co. on completion of The Coca-Cola Co.'s proposed acquisition of Coca-Cola Enterprises' North American Bottling Business, the company has announced. In addition, The Coca-Cola Co. will offer Dr Pepper and Diet Dr Pepper in local fountain accounts currently serviced by CCE and will include Dr Pepper and Diet Dr Pepper on its Freestyle fountain dispenser.
Under new licensing agreements, The Coca-Cola Co. will distribute Dr Pepper in the United States and Canada Dry in the Northeast United States, where they are currently distributed by CCE. The new agreements will have an initial term of 20 years, with 20-year renewal periods, and will require The Coca-Cola Co. to meet certain performance conditions. The Coca-Cola Co. 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 are currently sold by CCE.
"These agreements build a strong foundation for the continued growth of Dr Pepper and our leading flavor brands," said Larry Young, president and CEO of DPS. "It solidifies Coke's support of the Dr Pepper trademark while enabling us to optimize our route-to-market by assuming distribution of several key brands. Additionally, we're increasing our fountain presence, enabling millions of consumers to sample our brands each day — a great win for Dr Pepper."
As part of these transactions, DPS will receive a one-time cash payment of $715 million before taxes, fees and other related expenses. This upfront payment is net of the investment in the Freestyle fountain program, which is estimated at $115 million to $135 million.
These transactions are subject to The Coca-Cola Co.'s completing its planned acquisition of CCE's North American bottling business.